Question

Which of the following expressions is incorrect?

a) Sales revenue - cost of goods sold - Operating expenses = Net income
b) Gross profit - Operating expenses = Net income
c) Net income + Operating expenses = Gross profit
d) Operating expenses - Cost of goods sold = Gross profit

Answer 1

d) Operating expenses - Cost of goods sold = Gross profit

Explanation:

The formula of Net income is

Sales revenue

- cost of goods sold

= Gross profit

- Operating expenses

= Net income

So, we are going to analyze each option

a) Sales revenue - cost of goods sold - Operating expenses = Net income CORRECT

b) Gross profit - Operating expenses = Net income CORRECT

c) Net income + Operating expenses = Gross profit CORRECT

d) Operating expenses - Cost of goods sold = Gross profit INCORRECT

Answer 2

d) Operating expenses - Cost of goods sold = Gross profit

Explanation:

first of all when you say gross in accounting it means the totality so gross profit would never be a subtraction.

And finally operating expenses usually go with a negative sign {-} because it means costs or something goes opposite to the revenue of the firm.