Skip to main content

Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTIO

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.

EBK HEALTHCARE FINANCE: AN INTRODUCTIO

EBK HEALTHCARE FINANCE: AN INTRODUCTIO

6th Edition

ISBN: 9781567938111

Author: Gapenski

Publisher: VST

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 3, Problem 9.3STQ

Chapter 3, Problem 10.2STQ

Students have asked these similar questions

Define current operation income?

What is income approach measurement?

Distinguish between operating income and net income?

Chapter 3 Solutions

EBK HEALTHCARE FINANCE: AN INTRODUCTIO

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

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Century 21 Accounting General Journal
Accounting
ISBN:9781337680059
Author:Gilbertson
Publisher:Cengage

Text book image

Cornerstones of Cost Management (Cornerstones Ser...

Accounting

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Cengage Learning

Text book image

College Accounting, Chapters 1-27

Accounting

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:Cengage Learning,

Text book image

Financial Reporting, Financial Statement Analysis...

Finance

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:Cengage Learning

Text book image

Principles of Accounting Volume 2

Accounting

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax College

Text book image

Century 21 Accounting Multicolumn Journal

Accounting

ISBN:9781337679503

Author:Gilbertson

Publisher:Cengage

Text book image

Century 21 Accounting General Journal

Accounting

ISBN:9781337680059

Author:Gilbertson

Publisher:Cengage

SEE MORE TEXTBOOKS