Analysis Intermediate: Understanding the Income Statement

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1.
"Other income" includes a factor that is often not named in a balance sheet. What is the name for this factor?
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Extraordinary income. Both "other income" and "extraordinary income" are income derived from outside the normal scope of a companys operations.
2.
Taxes are among the expenditures on an income statement.
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True. Taxes are subtracted from income.
3.
Operating income measures how profitable a companys operations are.
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True. This ultimately assesses the competence of the company in running itself.
4.
The formula for net earnings includes interest expense. Interest expense is _______.
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The amount of interest the company pays to its creditors. This figure includes all creditors.
5.
What is a companys gross profit on sales if it earned $10 million in sales and spent $6 million on producing goods?
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$4 million. To calculate gross profit on sales, simply subtract cost of goods sold from sales.
6.
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.
7.
SONAR identifies the earnings on a balance sheet.
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True. The acronym includes the first letters of the earnings components.