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Regarding the income statement, which of the following is true? Click the answer you think is right Gross profit, Interest expense, and income taxes are all subtotals on the income statement Gross profit, income from operations, and net income are all subtotals on the income statement Gross profit, Income from operations, and Income before taxes are all subtotals on the income statement Net sales, incomes from operations, and income taxes are revenues on the income statement.
Expert Answer
Answer is B, D.
Option A:
Interest Expense and Income taxes are deduction from Gross Profit and Income before taxes respectively. Gross Profit is sub-total which is calculated by subtracting cost of goods sold from net sales.
Option B:
Gross Profit, Income from operations and net income are sub-totals on the income statement.
Where, Gross Profit is calculated by subtracting cost of goods sold from net sales, Income from Operation is calculated by subtracting operating expenses from gross profit and net income is calculated by subtracting income taxes from Income before taxes.
Option C:
Gross Profit, Income from operations and Income before taxes are sub-totals on the income statement.
Where, Gross Profit is calculated by subtracting cost of goods sold from net sales, Income from Operation is calculated by subtracting operating expenses from gross profit and income before taxes is calculated by subtracting interest expense from operating Income.
Option D:
Income taxes are deduction from Income before taxes. Net Sales is revenue on the income statement. Income from operation is a sub-total which is calculated by subtracting Operating expenses from Gross Profit.
