Question

Income from operations is gross profit less _______.

(a) operating expenses and other expenses and losses.
(b) operating expenses plus other revenues and gains.
(c) operating expenses

Answer 1

A. Income from Operations :-

GrossProfit - Operating expenses

Step-by-step explanation:

Operating Profit / Income [Income from Operations] is the profit from business core transactions, not from business' other side investments etc.

Gross Profit is excess of business core transaction revenues over its direct (manufacturing) costs .

Gross Profit = Net Sales - Direct production 'cost of goods sold'

Operating Profit is excess of business core transaction revenues over its direct (manufacturing) & indirect (selling) costs.

Operating Profit = Net Sales - Direct production 'cost of goods sold' - other operating i.e selling & management expenses

Answer 2

(c) operating expenses

Step-by-step explanation:

The formula to compute the income from operations is

Income from operations = Gross profit - operating expenses

where,

Gross profit = Sales revenue - cost of goods sold

And, the cost of goods sold is direct material cost, direct labor cost, etc

The operating expenses includes the day to day expenses like selling expenses, administrative expenses, etc