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1.
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.
2.
Different companies recognizing revenue in different ways.
True. How a company recognizes revenue will depend on the nature of its revenue stream. For example, you might pay only once for a service at one company, but several times over time (think insurance premiums) at another place.
3.
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.
4.
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.
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.
