Question

Which of the following best describes operating income? Multiple Choice It includes the results of discontinued operations. It is sales minus cost of goods sold and income tax expense. It is net sales minus cost of goods sold and operating expenses. It is before operating expenses.

Answer 1

Answer:

It is before operating expenses.

Explanation:

Operating income is an accounting measure that shows the amount of money that a company has made from its daily operating activities. This means that operating income does not include earnings from non-operating activities like interest made from loans (unless we are talking about a financial institution).

Operating income is equal to revenue minus cost of goods sold, minus any other operating expense such as wages, depreciation, utilities, and rent.