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1.
The expenses directly incurred in creating the goods or services that a company sells are called _______.
All of the above. These are all different terms used for these expenses.
2.
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.
3.
'Sales' is another word for revenue.
True. The two normally mean the same thing, though 'revenue' is more commonly used.
4.
Under accrual accounting, a company recognizes revenue when _______.
The company has earned it. A company recognizes revenue when it is earned, determined by when a company sells its goods or provides its services. Under accrual accounting, revenue is not necessarily recognized when cash is received.
5.
The expense that represents a piece of equipment's normal wear and tear over time is called what?
Depreciation expense. Depreciation refers to a tangible asset's gradual loss of value over time.
