If a company reported the following items on its income statement (cost of goods sold $6, 000, income tax expense $2, 000, interest expense $500, operating expense $3, 500, sales revenue $14, 000), what amount would be reported for the subtotal income from operations?

FINANCIAL ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

If a company reported the following items on its income statement (cost of goods sold $6, 000, income tax expense $2, 000, interest expense $500, operating expense $3, 500, sales revenue $14, 000), what amount would be reported for the subtotal “income from operations”?

A	$8, 000
B	$2, 000
C	$4, 500
D	$4, 000

Explanation:

Detailed explanation-1: -Cost of goods sold (COGS) definition It appears on an income statement and typically includes money spent on raw materials and labour. It does not include coss associated with marketing, sales or distribution. Cost of goods sold (COGS) is the direct cost of making a company’s products.

Detailed explanation-2: -One relatively simple way to determine the cost of goods sold is to compare inventory at the start and end of a given period using the formula: COGS = Beginning Inventory + Additional Inventory-Ending Inventory.

Detailed explanation-3: -COGS is often the second line item appearing on the income statement, coming right after sales revenue. COGS is deducted from revenue to find gross profit. Cost of goods sold consists of all the costs associated with producing the goods or providing the services offered by the company.

Detailed explanation-4: -Cost of goods sold is considered an expense in accounting and it can be found on a financial report called an income statement.

There is 1 question to complete.

BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING