MGT 4150 EXAM 3 QUESTIONS AND
ANSWERS ALL CORRECT
What is revenue? - Answer- Total sales or top line income
What is net income? - Answer- Profit after all expenses taxes and costs
What is cost of goods sold COGS? - Answer- Costs of materials labor and production
What is SG&A? - Answer- Selling general and administrative expenses
What is operating income? - Answer- Profit before interest and taxes
What is interest expense? - Answer- Cost of borrowing money
What are taxes on an income statement? - Answer- Government payments based on
profit
What is cash accounting? - Answer- Recording revenue and expenses when cash is
received or paid
What is accrual accounting? - Answer- Recording revenue and expenses when they
occur
What is a key difference between cash and accrual accounting? - Answer- Timing of
when revenue and expenses are recorded
Why is understanding income statements important? - Answer- Helps with decision
making and understanding business performance
What is P&L responsibility? - Answer- Being responsible for profits and losses
Why should managers understand income statements? - Answer- To see the big picture
and make better decisions
What is the main goal of most public corporations? - Answer- Maximize shareholder
value
Why do companies invest in CSR? - Answer- To improve reputation and long-term
profits
ANSWERS ALL CORRECT
What is revenue? - Answer- Total sales or top line income
What is net income? - Answer- Profit after all expenses taxes and costs
What is cost of goods sold COGS? - Answer- Costs of materials labor and production
What is SG&A? - Answer- Selling general and administrative expenses
What is operating income? - Answer- Profit before interest and taxes
What is interest expense? - Answer- Cost of borrowing money
What are taxes on an income statement? - Answer- Government payments based on
profit
What is cash accounting? - Answer- Recording revenue and expenses when cash is
received or paid
What is accrual accounting? - Answer- Recording revenue and expenses when they
occur
What is a key difference between cash and accrual accounting? - Answer- Timing of
when revenue and expenses are recorded
Why is understanding income statements important? - Answer- Helps with decision
making and understanding business performance
What is P&L responsibility? - Answer- Being responsible for profits and losses
Why should managers understand income statements? - Answer- To see the big picture
and make better decisions
What is the main goal of most public corporations? - Answer- Maximize shareholder
value
Why do companies invest in CSR? - Answer- To improve reputation and long-term
profits
