Answers: Chapter 6 - Income Statement Basics


6.1: Which one of these items best represents the meaning of revenue earned by a company?   

  1. Revenue is the profit made by a company before taxes
  2. Revenue is the profit made by a company after taxes
  3. Revenue is the total amount of money collected by the company from customers when it sells its products
  4. Revenue is the total amount of money collected by the company from customers when it sells its products minus the cost of those items.

The correct answer is #3

 

6.2: Which one of these items best represents the meaning of the earnings before taxes by a company?   

  1. Earnings before taxes is the revenue made by a company before taxes
  2. Earnings before taxes is the revenue made by a company after taxes
  3. Earnings before taxes is the amount of money a company takes in for selling its goods and services less the expenses associated with the items it sells
  4. Earnings before taxes is the company's total expenses less its revenue

The correct answer is #3
Earnings before taxes is the total revenue (the amount of money a company takes in for selling its goods)  minus the total expenses (roughly represented as the expenses of the items it sells).

 

6.3: How often do corporations release their earnings?

Quarterly; Corporations usually release their earnings for each three- month interval during their fiscal year.