Question

A strip mall generates $215,000 in effective rental income and $3,000 in other income. The same mall has $102,000 in operating expenses and $15,000 as reserves. What is the net operating income ofthe strip mall?

A. $113,000
B. $99,000
C. $101,000
D. $116,000

Answer 1

Answer: $116,000

Explanation:

The net operating income will be the operation profit after deducting the expenses from the accrued revenue (reserve exclusive)

The revenue generated are $215,000 + $3,000

= $218,000

Expenses incurred;

$102,000

The net operating income = $218,000 - $102,000

= $116,000

Note that reserves is not used in business operation. Therefore it cannot be regarded either as revenue or expenses.