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1. If a company rents an office premises for its staff, where in the Income Statement would the expense reside, and why?
Cost of Goods Sold, because without an office space, staff could not do work
Operating Expense, because it is not directly related to the revenue source
Operating Expense, because it is a fixed cost
2. How should the key items of the Income Statement be organized?
Revenue, Cost of Goods Sold, Operating Expenses, Interest, Depreciation and Tax
Revenue, Cost of Goods Sold, Operating Expenses, Tax, Depreciation, Interest
Revenue, Cost of Goods Sold, Operating Expenses, Depreciation, Interest Expense, then Tax.
3. What is the final row in the Income Statement?
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Net Profit Before Tax (NPBT)
Net Profit After Tax (NPAT)
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