Question

Following is a simple income statement. Match each term with its definition from the drop-down list of choices. Income Statement (thousands of dollars) Year 1 A. Revenues (Sales) 7,000 B. Cost of Goods Sold (2,781) C. Operating Expenses (1,809) D. Operating income (EBIT) 2,410E. Interest expense (190) F. Taxes payable 2,220 G. Taxes (434) H. Net income The profit (or loss) made by the firm. 1,786 I. Cash Flow Statement J. Accounting Equation K. Net Income L. Balance SheetM. Income statementN. Liquidity 1. Money generated by a firm's products or services2. Cost associated with making and selling the firm's products3. Cost of generating the current period's revenues including rent, wages, supplies and general and administrative expenses.4. Shows the profit or loss a firm makes before paying taxes5. Cost of servicing the firm's debt.6. Earnings before interest and taxes 7. Includes all Federal, State and Local taxes paid by the firm8. The profit (or loss) made by the firm9. "Snapshot" of a company's activities at a given point in time 10. Assets = Liabilities + Equity 11. Profits generated by an organization 12. Shows revenues, expenses, and profitability over a period of time 13. Shows cash from operating, investing, and financing activities 14. How quickly assets can be converted into cash

Answer 1

Answer:

Matching each term with its definition:

Income Statement (thousands of dollars) Year 1

A. Revenues (Sales) 7,000  : 1. Money generated by a firm's products or services

B. Cost of Goods Sold (2,781) : 2. Cost associated with making and selling the firm's products

C. Operating Expenses (1,809) : 3. Cost of generating the current period's revenues including rent, wages, supplies and general and administrative expenses.

D. Operating income (EBIT) 2,410 : 4. Shows the profit or loss a firm makes before paying taxes

E. Interest expense (190) : 5. Cost of servicing the firm's debt.

F. Taxes payable 2,220 : 6. Earnings before interest and taxes

G. Taxes (434) : 7. Includes all Federal, State and Local taxes paid by the firm

H. Net income 1,786 : 8. The profit (or loss) made by the firm

I. Cash Flow Statement : 13. Shows cash from operating, investing, and financing activities

J. Accounting Equation : 10. Assets = Liabilities + Equity

K. Net Income : 11. Profits generated by an organization

L. Balance Sheet : 9. "Snapshot" of a company's activities at a given point in time

M. Income statement : 12. Shows revenues, expenses, and profitability over a period of time

N. Liquidity : 14. How quickly assets can be converted into cash

Explanation: