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Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

The operating income. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net Profit is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. As per the ‘Multistep Income Statement’ format, the operating expenses and revenue earned are segregated from non-operating expenses and revenues, gain or losses. It is calculated in 4 steps, i.e., gross profit, operating expenses, non-operating income and finally the net income. Operating Income: It is the difference of revenue earned and expenses incurred to carry out primary operation of the business. Thus, it is the difference between ‘gross profit’ and ‘total operating expenses’. Step 1: Calculation of Gross Profit The first step in multi-step income statement is to calculate ‘Gross Profit’. Gross Profit is the sales revenue less the cost of goods sold during a particular period. Step 2: Calculation of total operating expense The second step in multi-step income statement is to calculate ‘Total Operating Expenses’. All the expenses that are incurred for the business operations are shown under the head ‘Operating Expenses’.

The operating income. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Net Profit is money earned from sales or rendering services less the expenses incurred to perform such business operations whereas net loss is the scenario where such expenses exceed the revenue earned from sales or rendering of services in a particular period. As per the ‘Multistep Income Statement’ format, the operating expenses and revenue earned are segregated from non-operating expenses and revenues, gain or losses. It is calculated in 4 steps, i.e., gross profit, operating expenses, non-operating income and finally the net income. Operating Income: It is the difference of revenue earned and expenses incurred to carry out primary operation of the business. Thus, it is the difference between ‘gross profit’ and ‘total operating expenses’. Step 1: Calculation of Gross Profit The first step in multi-step income statement is to calculate ‘Gross Profit’. Gross Profit is the sales revenue less the cost of goods sold during a particular period. Step 2: Calculation of total operating expense The second step in multi-step income statement is to calculate ‘Total Operating Expenses’. All the expenses that are incurred for the business operations are shown under the head ‘Operating Expenses’.

Solution Summary: The author explains that operating income is the difference between gross profit, operating expenses, non-operating income and finally the net income.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

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Chapter 3, Problem 9.3STQ

Chapter 3, Problem 10.2STQ

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Define current operation income?

What is income approach measurement?

Distinguish between operating income and net income?

Chapter 3 Solutions

Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Ch. 3 - Prob. 4.1STQ Ch. 3 - Prob. 4.2STQ Ch. 3 - Prob. 4.3STQ Ch. 3 - Prob. 5.1STQ Ch. 3 - Prob. 5.2STQ Ch. 3 - Prob. 5.3STQ Ch. 3 - Prob. 6.1STQ Ch. 3 - Prob. 6.2STQ Ch. 3 - Prob. 7.1STQ Ch. 3 - Prob. 7.2STQ Ch. 3 - Prob. 7.3STQ Ch. 3 - Prob. 8.1STQ Ch. 3 - Prob. 8.2STQ Ch. 3 - Prob. 8.3STQ Ch. 3 - Prob. 8.4STQ Ch. 3 - Prob. 9.1STQ Ch. 3 - Prob. 9.2STQ Ch. 3 - Prob. 9.3STQ Ch. 3 - Prob. 10.1STQ Ch. 3 - Prob. 10.2STQ Ch. 3 - Prob. 11.1STQ Ch. 3 - Prob. 11.2STQ Ch. 3 - Prob. 12.1STQ Ch. 3 - Prob. 12.2STQ Ch. 3 - Prob. 12.3STQ Ch. 3 - Prob. 13.1STQ Ch. 3 - Prob. 13.2STQ Ch. 3 - Prob. 13.3STQ Ch. 3 - Prob. 13.4STQ Ch. 3 - Prob. 14.1STQ Ch. 3 - Prob. 14.2STQ Ch. 3 - Prob. 14.3STQ Ch. 3 - Prob. 15.1STQ Ch. 3 - Prob. 15.2STQ Ch. 3 - Prob. 16.1STQ Ch. 3 - Prob. 16.2STQ Ch. 3 - Prob. 3.1Q Ch. 3 - Prob. 3.2Q Ch. 3 - Prob. 3.3Q Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Prob. 3.6Q Ch. 3 - Prob. 3.7Q Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Prob. 3.1P Ch. 3 - Prob. 3.2P Ch. 3 - Prob. 3.3P Ch. 3 - Prob. 3.4P Ch. 3 - Prob. 3.5P Ch. 3 - Prob. 3.6P Ch. 3 - Prob. 3.7P Ch. 3 - Prob. 3.8P Ch. 3 - Prob. 3.9P

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