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Quiz: All About Income
by Staff
You're starting your own business and learning how to make it profitable. Now it's time to test your knowledge of the two key financial terms you'll need to run that business: operating income and gross income.

In business operations terms, what does COGS stand for?

  • Customized operational gross services
  • Cost of goods sold
  • Common operational goods sales

If you owned a sneaker company, which of these would be considered a cost of goods sold (COGS)?

  • Rubber for the soles
  • Employee wages
  • Taxes on the shoes

Which of the following would NOT be considered an operating expense?

  • Copy paper
  • Electricity
  • Investments

Operating income means the same thing as EBIT, which stands for:

  • Earnings before interest and taxes
  • Engaged business information technology
  • Economically balanced income transaction

Operating income is calculated as:

  • Gross income plus operating expenses plus depreciation
  • Gross income minus operating expenses minus depreciation
  • Gross income plus depreciation minus operating expenses

Which is a more accurate way to measure a company's profitability?

  • Gross income
  • Operating income
  • Both are inaccurate

What is another name for gross income?

  • Gross profit
  • Gross interest
  • Gross capital

How would you calculate gross income?

  • Sales - cost of goods sold
  • Sales + cost of goods sold
  • Sales - cost of goods sold - taxes

True or false: Gross income includes salaries and office supplies.

  • True
  • False

A company with a high gross margin is said to be very:

  • Efficient
  • Entrepreneurial
  • Wasteful

If a table manufacturer's revenue is $500 per table and it spends $200 to produce each table, as well as $25 in salaries and $25 in office expenses, what is the manufacturer's gross income?

  • $500
  • $300
  • $250

What would that same table manufacturer's operating income be if it makes $500 per table and spends $200 to produce each table, $25 in salaries, and $25 in office expenses?

  • $500
  • $300
  • $250

In 2002, IBM reported the profit from the sale of a subsidiary company as operating income. Is the sale of a company considered operating income?

  • Yes
  • No

The amount of money a car manufacturing company earns from selling its automobiles is called:

  • Gains
  • Expenses
  • Revenue

What is the term used to describe the decrease in value of a company's equipment over time?

  • Devaluation
  • Depreciation
  • Disinvestment

If a corporation is selling picnic baskets for $50, current sales are 10,000 units, and the costs are $10 per unit, how much will the operating income change if sales increase by another 10,000 units?

  • $200,000 increase
  • $400,000 increase
  • $600,000 increase

A company's income statement summarizes that company's expenses and revenues at a specific moment in time. True or false?

  • True
  • False

True or false? Cutting your company's prices to boost sales will increase your gross profit.

  • True
  • False

If a vacuum cleaner company's operating income decreases, but its gross income stays the same, the company might have:

  • Sold fewer vacuum cleaners
  • Had a higher electric bill
  • Lost a lawsuit

If an electronics company sells $300,000 worth of televisions, its cost of goods sold is $20,000, and its operating expenses are $50,000, what is the company's operating income?

  • $200,000
  • $230,000
  • $250,000