Question

LO 2.1Which of the following represents the components of the income statement for a service business?

Sales Revenue – Cost of Goods Sold = gross profit
Service Revenue – Operating Expenses = operating income
Sales Revenue – Cost of Goods Manufactured = gross profit
Service Revenue – Cost of Goods Purchased = gross profit

Answer 1

Service Revenue – Operating Expenses = operating income

Step-by-step explanation:

In the case of service business, the following components of the income statement are service revenue instead of sales revenue and the operating expenses

In mathematically,

Operating income = Service revenue - operating expenses

If we deduct the operating expenses from the service revenue, then the operating income can come