Question

Assume ABC Company has the following information for the multi-step income statement:

Net Sales Revenue: $11,000
Cost of Goods Sold: $4,400
Interest Expense: $500
Salaries Expense: $700
Rent Expense: $300

What is the total operating expenses for ABC Company?
1) $1,500
2) $1,500
3) $1,500
4) $1,500

Answer 1

To calculate the total operating expenses for ABC Company, only the Salaries Expense and Rent Expense should be summed, which total $1,000. The provided options are all incorrect as they state $1,500, which likely includes an error.

Step-by-step explanation:

To calculate the total operating expenses for ABC Company from the information provided on the income statement, we need to sum different types of expenses that are directly related to the operating activities of the business. This includes Salaries Expense and Rent Expense, but does not include Interest Expense as that is a non-operating expense. The provided data gives us $700 for Salaries Expense and $300 for Rent Expense.

Add the Salaries Expense and Rent Expense together to get the total operating expenses:

• Salaries Expense: $700
• Rent Expense: $300

Total Operating Expenses = Salaries Expense + Rent Expense = $700 + $300 = $1,000.

Thus, the correct answer is not listed among the options given as all options incorrectly state $1,500.