2. Financial Statements

Income Statement — Quiz

Test your understanding of income statement with 5 practice questions.

Practice Questions

Question 1

A company has sales revenue of $\$750,000$, cost of goods sold of $\$300,000$, operating expenses of $\$150,000$, interest expense of $\$20,000$, and tax expense of $\$50,000. Calculate the net profit after tax.

Question 2

A company recognizes revenue from a long-term contract over time. Which revenue recognition method is most appropriate if the outcome of the contract can be reliably estimated?

Question 3

A business incurs $\$10,000 in research and development costs for a new product. The product is expected to generate revenue over the next 5 years. According to the matching principle, how should these costs be treated in the income statement?

Question 4

A company's gross profit margin is $40\%$ and its operating profit margin is $15\%$. If sales revenue is $\$1,000,000, what are the operating expenses?

Question 5

Which of the following scenarios would lead to an immediate recognition of revenue under IFRS 15, 'Revenue from Contracts with Customers'?