Which measure reflects profitability from normal operations and a key performance measure for predicting the future profit-generating ability of a company?
A) Gross profit.
B) Operating income.
C) Income before income taxes.
D) Net income.
Answer: Operating income.
A company is most likely to utilize the specific identification method if its inventory consists of:
A) Unique products.
B) Very expensive products.
C) A relatively small number of products.
D) All of the other answers are reasons to utilize the specific identification method
Answer: All of the other answers are reasons to utilize the specific identification method
Operating income is calculated as net sales minus:
A) Utilities expense.
B) Salaries expense.
C) Cost of goods sold.
D) All of the other answers are subtracted from net sales to calculate operating income.
Answer: All of the other answers are subtracted from net sales to calculate operating income
