Practice question · Sort into groups
Revenue or expense? Sort each item.
Groups: Revenue · Expense
- Marketing and advertising
- Electricity for the office
- Depreciation of equipment
- Service fees earned
- Sales of finished goods
Hints
- Revenue is value delivered to customers; everything else is cost.
- Depreciation is a cost even though no cash moves.
Show the answer
Revenue: Sales of finished goods, Service fees earned
Expense: Depreciation of equipment, Marketing and advertising, Electricity for the office
Why
Revenue is value delivered to customers. Everything else — production, administration, depreciation, marketing — is cost. The income statement subtracts the second from the first.
Practise The Income Statement
The app has 5 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on The Income Statement
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- Net profit flows into retained earnings on the balance sheet at period-end.
- Order the income-statement waterfall from top to bottom.
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