Question

An income statement prepared according to 11th edition of USALI will show __________ when subtracting non-operating income and expenses from Income before non-operating income and expenses. *

1) gross profit
2) house profit
3) EBITDA
4) total revenues

Answer 1

Subtracting non-operating income and expenses from Income before non-operating income and expenses according to USALI results in net operating income, showing the profitability of primary business activities.

Step-by-step explanation:

When subtracting non-operating income and expenses from Income before non-operating income and expenses according to the 11th edition of USALI (Uniform System of Accounts for the Lodging Industry), the resulting figure is known as net operating income.

Non-operating income and expenses are items that are not related to the primary operations of a business, such as interest expense or gains from asset sales. Therefore, these items are subtracted to focus on the profitability of the core business activities. The calculation of net operating income allows for an assessment of operational efficiency apart from these non-operating factors.