Belongs to Principle of Hospitality Finance

Chapter 3: The Income Statement

1. A profit center is an individual revenue-generating segment within a business.

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• False

2. Earnings, needed to compute ROI, can be obtained from the income statement.

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• False

3. An invoice is a form used by a hospitality company to place an order for goods.

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• False

4. An income statement is a statement of revenues, expenses and profits on a specific date.

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• False

5. An accounting period always consists of one calendar month.

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6. Accrual accounting requires a businesss revenues to be reported when earned and its expenses to be reported when incurred.

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• False

7. Schedules created to accompany the income statement are intended to show summary data rather than detailed data.

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• False

8. Net income, or profit, is sometimes known as the bottom line because it is often the bottom-most line on an income statement.

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• False

1. A vertical analysis approach compares all items on the income statement to revenues using percentages.

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• False

10. Common-size analysis compares all items on the income statement to the previous periods balances.

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• False

11. To compute the variance (in dollars) from budget, simply divide the budgeted amount of expense by the amount actually spent.

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• False