Understanding Profit and Loss
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Questions and Answers

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

  • Income statement
  • Balance sheet (correct)
  • Cash flow statement
  • Retained earnings statement

What is the term for a financial statement that shows a company's revenues and expenses over a specific period of time?

  • Cash flow statement
  • Retained earnings statement
  • Income statement (correct)
  • Balance sheet

What does the term 'revenues' refer to in the context of financial statements?

  • Funds received from issuing bonds
  • Money spent on long-term investments
  • Money received from selling goods or services (correct)
  • Cash payments made to suppliers

What is the term for the portion of a company's net income that is not paid out as dividends but is retained for reinvestment in the business?

<p>Retained earnings (D)</p> Signup and view all the answers

Which type of financial statement shows the inflow and outflow of cash from operating, investing, and financing activities?

<p>Cash flow statement (B)</p> Signup and view all the answers

If a company has more expenses than revenues, what is its financial status?

<p>Insolvent (D)</p> Signup and view all the answers

What does the term 'gross profit' represent on an income statement?

<p>Total revenue minus cost of goods sold (A)</p> Signup and view all the answers

Which financial statement provides information about the sources and uses of cash during a specific period?

<p>Statement of Cash Flows (C)</p> Signup and view all the answers

What do 'assets' represent on a balance sheet?

<p>Resources owned by the business (C)</p> Signup and view all the answers

The ratio of current assets to current liabilities is used to assess:

<p>Liquidity (C)</p> Signup and view all the answers

Earnings before interest and taxes (EBIT) on an income statement represent:

<p>Operating profit before tax and interest expense (D)</p> Signup and view all the answers

Study Notes

The 101 on "Profit and loss"

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Description

Learn about the concepts of profit and loss and how to calculate them. This quiz covers topics such as cost price, selling price, profit percentage, and loss percentage.

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