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1.
Which of the following best measures the results of a company's primary business?
Operating income. Operating income measures the results of a company's main operations or lines of business. Gross profit measures the markup of a company's goods or services but does not include certain overhead expenses. Net income often includes other items, such as interest expense, interest income, and one-time charges.
2.
'Sales' is another word for revenue.
True. The two normally mean the same thing, though 'revenue' is more commonly used.
3.
Under accrual accounting, a company records an expense when _______.
The company has incurred it. A company records an expense when it is incurred. Under accrual accounting, expenses are not necessarily incurred when cash is spent.
4.
A company's revenue may also be called by what other word?
Sales. For accounting purposes, it usually is called revenue.
5.
A company's cost of sales represents all of the expenses directly incurred in _______.
Creating goods or services. Cost of sales is also known as cost of goods sold or cost of services.
