a. Revenue is the amount earned from sales before expenses are taken out. It is different from Profit, which is revenue-expenses.
b. Overhead costs are ongoing costs of operating a business. These things include rent, employee salaries, cost of raw materials and other production components.
c. Profit is the money you earn after all expenses are paid. Companies cannot stay in business or secure financing without being consistently profitable.
d. The income statement records all revenues and business expenses. This is important because stockholders and investors can calculate profit as well as see how well the business manages it expenses.
e. This is one you will have to answer on your own because it is an opinion question. One thing to consider is retained profit, which is the amount of profit held on to and saved for investments and growth instead of being paid out to stockholders and investors. Keep that in mind when deciding where to invest.
