Entrepreneurship and Small Business Management

Income Statement

An income statement, or profit-and-loss statement, shows in detail your income and operating expenses. If your gross profit is greater than your total operating expenses, your income statement will show a net income, or net profit.

Gross Profit = Net Sales - Cost of Goods Sold

Net Income = Gross Profit - Total Operating Expenses

1.		Three months after opening their maternity clothing store Two's Company, Jetta and Maria prepare an income statement. Sales for the first three months totaled $13,420. Jetta and Maria's records show that the goods they sold cost them $4100. What is Two's Company's gross profit for the three months?
			A)	$17,520
			B)	$8,450
			C)	$9,260
			D)	$9,320
2.		In problem 1, records show that operating expenses for Two's Company totaled $8,050 for the three months. What is the store's net income?
			A)	$9,320
			B)	$1,020
			C)	$1,270
			D)	$970
3.		A store's sales totaled $97,000. During the same time period, there was $3,500 worth of merchandise returned. What was the store's net sales?
			A)	$93,500
			B)	$94,500
			C)	$100,500
			D)	$35,000
4.		In problem 3, the cost of the goods the store sold was $42,000. What is the store's gross profit?
			A)	$45,500
			B)	$51,500
			C)	$49,500
			D)	$55,500
5.		In problems 3 and 4, the store's operating expenses total $33,800. What is the store's net income?
			A)	$18,200
			B)	$7200
			C)	$17,700
			D)	$59,700
6.		Sparkle Housekeeping Service prepares an income statement monthly. For this past month, it collected $3,270 from homeowners for services provided (sales). It had $85 in allowances for jobs that had to be redone. What was Sparkle's net sales?
			A)	$3,185
			B)	$2,995
			C)	$3,045
			D)	$3,365
7.		In problem 6, salaries and wages totaled $1,760, supplies cost $312, and other operating expenses totaled $90. What were the total operating expenses for the month?
			A)	$2,072
			B)	$402
			C)	$1,850
			D)	$2,162
8.		In problems 6 and 7, what is Sparkle Housekeeping Service's net income for the month?
			A)	$1,113
			B)	$1,335
			C)	$1,023
			D)	$1,760
9.		Cheesecake Heaven had sales last month of $7,400. The ingredients that Cheesecake Heaven used cost $580, salaries and wages totaled $2,200, and other operating expenses were $1,200. What was the net income?
			A)	$5,200
			B)	$3,420
			C)	$6,300
			D)	$4,020
10.		Mum Aluminum Co. prepares an annual income statement for distribution to its stockholders. This past year, net sales totaled $119.6 million. Cost of goods sold totaled $67.1 million. What was the gross profit?
			A)	$52.5 million
			B)	$5.7 million
			C)	$17.8 million
			D)	$48.3 million
11.		In problem 10, Mum's operating expenses included: wages and salaries of $25.9 million, general taxes of $1.3 million, income taxes of $7.4 million, and miscellaneous operating expenses of $3.5 million. What were the total operating expenses?
			A)	$34 million
			B)	$37.2 million
			C)	$38.1 million
			D)	$42.3 million
12.		In problems 10 and 11, what is Mum's net profit for the year?
			A)	$10.2 million
			B)	$2.2 million
			C)	$14.4 million
			D)	$17.8 million
13.		A furniture store is preparing a monthly income statement. Total sales for the month were $157,600. Returned merchandise was worth $7,300. The goods sold cost the store $82,800. Total operating expenses were $32,400. What were the store's net sales?
			A)	$50,400
			B)	$150,300
			C)	$15,470
			D)	$125,600
14.		In problem 13, what is the store's gross profit?
			A)	$117,900
			B)	$67,500
			C)	$42,800
			D)	$59,200
15.		In problem 13, what is the store's net income?
			A)	$82,800
			B)	$29,300
			C)	$30,100
			D)	$35,100
16.		Hannah Banana Toys prepared an income statement for last quarter. Sales were $242,600 and returns were worth $2940. What were Hannah Banana's net sales?
			A)	$239,660
			B)	$242,660
			C)	$199,660
			D)	$231,660
17.		In problem 16, the cost of the toys sold last quarter was $98,100. What was the gross profit?
			A)	$140,660
			B)	$141,560
			C)	$144,500
			D)	$132,560
18.		In problems 16 and 17, Hannah Banana's operating expenses were $88,200. What was the store's net income?
			A)	$49,800
			B)	$37,660
			C)	$53,360
			D)	$47,210
19.		Last month, operating expenses for Chile Chili South American restaurant included salaries and wages ($8,210), rent and utilities ($2,500), food and supplies ($9,000), and miscellaneous purchases ($250). What were Chile Chili's total operating expenses?
			A)	$11,900
			B)	$13,610
			C)	$20,410
			D)	$19,960
20.		In problem 19, Chile Chili's gross profit was $22,350. What was the net income?
			A)	$2,390
			B)	$10,420
			C)	$1,790
			D)	$1,940