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AP Business with Personal Finance: Income Statement (Drill 17)

Drill 17 ·

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About This Drill

AP Business with Personal Finance: Income Statement (Drill 17) is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.

Practice interpreting a two-year comparative income statement: calculating a margin, diagnosing why profitability declined, defining gross profit, and recommending an action that targets the line that moved. This drill uses an invented company and original figures.

Passage

Trailmark Bicycles assembles and sells bicycles. The comparative income statement below shows two years of results, in thousands of dollars.

Item20242025
Revenue800880
Cost of Goods Sold(480)(572)
Gross Profit320308
Operating Expenses(200)(200)
Operating Profit120108
Interest and Taxes(40)(36)
Net Profit8072

Questions in This Drill

  1. What was Trailmark's gross profit margin in 2025?
  2. Revenue rose from 2024 to 2025, yet net profit fell. Which change most directly caused the decline in profitability?
  3. On this statement, "gross profit" is best described as which of the following?
  4. Trailmark's owner wants to reverse the decline in gross margin shown in the 2025 statement. Based on the data, which action would most directly address the line causing that decline?
  5. An investor wants to know whether Trailmark kept the same share of each sales dollar as profit across the two years. Comparing which pair of figures answers that best?