Question

16. Operating Profit is the income after subtracting all the expenses from the gross margin (true/false)

17. Net profit is after subtracting all expenses from the revenue (true/false)

18. An Income statement is a report showing how well the business used its resources over a period of time. (true/false) 19. A debit increases an asset or an expense account (true/false)

20. Depreciation is the allocation of the cost of an asset with a life longer than a year (true/false)

Answer 1

Answer-16)- FALSE- Operating Profit is the income after subtracting all the expenses from the gross margin.

Explanation- Operating Profit is the income after subtracting operating expenses from the gross margin.

Answer-17)- TRUE- Net profit is after subtracting all expenses from the revenue.

Explanation- Net profit= Total revenue – All expenses (Operating & Non-operating expenses)

Answer-18)- FALSE- An Income statement is a report showing how well the business used its resources over a period of time.

Explanation- An income statements or profit & loss account shows the organisation revenues & expenses during the particular period.

Answer-19)- TRUE-A debit increases an asset or an expense account.

Explanation- As per the golden rule of accountancy, debit increase the an asset and an expense account.

Answer-20)- FALSE- Depreciation is the allocation of the cost of an asset with a life longer than a year.

Explanation- Depreciation is the allocation of the cost of an asset over its useful life. The asset’s cost is usually spread over the years in which such assets is used.