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1.
When a company buys a building, it normally records the entire cost of the asset as an up-front expense on the income statement.
False. The company would record the price on the balance sheet and then, each year, take a part of that cost and expense it on the income statement as a depreciation expense. This is an example of accrual accounting.
2.
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.
3.
A company's revenue may also be called by what other word?
Sales. For accounting purposes, it usually is called revenue.
4.
'Sales' is another word for revenue.
True. The two normally mean the same thing, though 'revenue' is more commonly used.
5.
A company's sales, minus its cost of sales, is known as _______.
Gross profit. Gross profit is defined as sales (or revenue) minus cost of sales.
