What is the primary method used to classify expenses on a Profit and Loss (P&L) statement?

By their nature By their function (cost of sales method) By their relevance to revenue By their impact on net income

What does the term "Cost of materials consumed" typically represent on a P&L statement?

The cost of all materials purchased by the company The cost of raw materials used in manufacturing finished goods The cost of goods sold during the financial year The cost of all operating expenses related to production

What does a negative value for "Change in inventories of finished goods" indicate?

The company sold more goods than it produced during the period The company produced more goods than it sold during the period The company's inventory valuation method is incorrect The company experienced a loss on the sale of finished goods

What is the key difference between depreciation and amortization?

Depreciation applies to tangible assets, while amortization applies to intangible assets Depreciation is calculated on a straight-line basis, while amortization uses a declining balance method Depreciation is a non-cash expense, while amortization is a cash expense Depreciation is recorded on the balance sheet, while amortization is recorded on the income statement

How is Profit Before Tax (PBT) calculated?

Total Revenues - Total Operating Expenses Total Revenues - Cost of Goods Sold Gross Profit - Operating Expenses Net Income + Taxes

What are exceptional items/extraordinary items on a P&L statement?

Recurring expenses that are unusually high Expenses related to the company's core operations Expenses incurred in financing activities Non-recurring expenses that are not expected to occur regularly

What does the term "bottom line" typically refer to on a P&L statement?

Gross Profit Operating Income Profit Before Tax Profit After Tax

What does Earnings Per Share (EPS) represent?

The company's net income divided by its total assets The company's profit per share of preferred stock The company's profit per share of common stock The company's total revenue divided by the number of outstanding shares