Analysis Intermediate: Understanding the Income Statement

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1.
Total revenue from product sales minus the cost of producing those products yields _______.
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Gross profit on sales. This is the formula for gross profit on sales.
2.
On the balance sheet, retained earnings appear on _______.
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The bottom line. This fact does not make them the proverbial bottom line, however.
3.
Operating income includes any income that comes from outside sources.
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False. Outside sources are not part of the operating income equation.
4.
EDIT identifies ________.
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Expenditures. Expenditures, when placed vertically and worded in a special way, will spell the acronym EDIT.
5.
Net earnings is often called the "bottom line." On the income statement, it appears last.
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False. Common and preferred dividends, as well as retained earnings, appear after net earnings.
6.
Suppose that the company Edu.gov.com had $4 million in operating income last year. Suppose that all of its other income was $1 million, and it paid $1 million in taxes. What are Edu.gov.coms earnings before interest and taxes?
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$5 million. Taxes do not count!
7.
What is the famous term for a companys net earnings?
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The bottom line. However, although it is called the bottom line, it does not occupy the lowest position on the page.