Lesson 5.10.1
5.10.1 Income statements Quiz: OCR Business, Unit 5
20 questions
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Lesson 5.10.1, Income statements: 20 multiple choice questions for the OCR Business (H431), Unit 5: Accounting and finance, written with Revision Ninja.
Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.
The 20 questions
-
What does an income statement record over a given trading period?
- Financial position
- Financial performance
- Capital structure
- Cash flows
-
What is subtracted from sales revenue to calculate gross profit?
- Corporation tax
- Cost of sales
- Dividend payments
- Operating expenses
-
What is another term commonly used for revenue on an income statement?
- Net profit
- Capital employed
- Turnover
- Gross margin
-
Which section of an income statement includes overhead expenses like rent and advertising?
- Non-current assets
- Cost of sales
- Capital reserve
- Expenses
-
What is subtracted from gross profit to calculate operating profit?
- Cost of sales
- Interest payments
- Dividends paid
- Operating expenses
-
What is deducted from operating profit to calculate profit before tax?
- Cost of sales
- Dividend payments
- Retained earnings
- Finance costs
-
Where does retained profit from the income statement transfer next?
- Tax authority ledger
- Statement of financial position
- Asset depreciation schedule
- Cash flow forecast
-
Which stakeholders use the income statement to assess potential returns on investment?
- Debt collectors
- Shareholders
- Suppliers
- Local council
-
A firm has revenue of £100,000 and cost of sales of £40,000. What is its gross profit?
- £140,000
- £60,000
- £40,000
- £2.50
-
A shop generates £50,000 revenue, £20,000 gross profit, and £5,000 expenses. What is its operating profit?
- £15,000
- £10,000
- £30,000
- £25,000
-
If a company has £80,000 operating profit and £10,000 interest expense, what is profit before tax?
- £70,000
- £80,000
- £8,000
- £90,000
-
A business has gross profit of £30,000 and total revenue of £120,000. What is cost of sales?
- £40,000
- £90,000
- £4,000
- £150,000
-
Which item is classified as part of cost of sales for a bakery?
- Flour and sugar
- Manager salary
- Shop rent
- Van depreciation
-
If profit after tax is £40,000 and dividends are £15,000, what is retained profit?
- £15,000
- £55,000
- £40,000
- £25,000
-
A manager notices rising rent and utility bills. Which profit figure is directly reduced?
- Total revenue
- Operating profit
- Opening inventory
- Gross profit
-
A firm reports £200,000 revenue, £120,000 cost of sales, and £50,000 expenses. What is operating profit?
- £50,000
- £80,000
- £30,000
- £150,000
-
Why might a business showing high profit on its income statement still fail?
- High gross margin
- Poor cash flow
- Excessive retained earnings
- Low tax liability
-
Which accounting principle requires matching revenue with costs incurred in the same period?
- Going concern
- Accruals concept
- Prudence concept
- Money measurement
-
How does an increase in opening inventory affect the cost of sales calculation?
- Has no effect
- Increases cost
- Decreases cost
- Reduces sales directly
-
Why do potential lenders inspect a firm's operating profit on the income statement?
- Calculate working capital
- Assess interest cover
- Check acid test
- Audit stock levels
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