Multiple Choice
Businesses can compensate employees for work they produce when being paid by which of the following methods, which would be deducted from gross sales to calculate net sales?
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4. Merchandising Operations
Net Sales
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Trevor restores antique cars and sells them for profit. This is an example of _____ income.
A
Dividend income
B
Operating income
C
Interest income
D
Non-operating income
Verified step by step guidance1
Understand the concept of operating income: Operating income refers to the profit earned from a company's core business operations, excluding any income from investments, interest, or other non-operational sources.
Identify Trevor's primary activity: Trevor restores antique cars and sells them for profit. This activity is directly related to his core business operations.
Differentiate between the types of income: Dividend income comes from investments in stocks, interest income comes from lending money or investments in bonds, and non-operating income comes from activities outside the core business operations.
Determine the correct classification: Since Trevor's income is derived from his primary business activity of restoring and selling cars, it falls under operating income.
Conclude that the correct answer is operating income, as it aligns with the definition and Trevor's business activities.
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