The following data include all the elements from Cambridge Company's income statement: $$\begin{array} { l r }
\text { Administrative Expense } & \$ 872 \
\text { Cost of Goods Sold } & 3,627 \
\text { Gain on Sale of Securities } & 623 \
\text { Income Tax Expense } & 1,234 \
\text { Loss on Discontinued Operations } & 1,229 \
\text { Loss on Disposal of Equipment } & 237 \
\text { Revenue } & 8,766 \
\text { Selling Expense } & 1,425
\end{array}$$ What is the amount of operating income for Cambridge Company?
A) $2,842
B) $5,139
C) $3,228
D) $3,465

Question

The following data include all the elements from Cambridge Company's income statement: $$\begin{array} { l r } 
\text { Administrative Expense } & \$ 872 \
\text { Cost of Goods Sold } & 3,627 \
\text { Gain on Sale of Securities } & 623 \
\text { Income Tax Expense } & 1,234 \
\text { Loss on Discontinued Operations } & 1,229 \
\text { Loss on Disposal of Equipment } & 237 \
\text { Revenue } & 8,766 \
\text { Selling Expense } & 1,425
\end{array}$$ What is the amount of operating income for Cambridge Company?
A) $2,842
B) $5,139
C) $3,228
D) $3,465

Quizplus · Accepted Answer

Operating income is calculated by subtracting cost of goods sold, operating expenses, and other expenses from revenue. In this case, operating income is calculated as follows:Revenue: $8,766Cost of Goods Sold: $3,627Administrative Expense: $872Selling Expense: $1,425Total Operating Expenses: $5,924Operating Income: $8,766 - $5,924 = $2,842

The Following Data Include All the Elements from Cambridge Company's