ABC Company accepted a national credit card for a $3,000 purchase. The cost of the goods sold is $2,400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

Question

Quizplus · Accepted Answer

The cost of goods sold is $2,400, and ABC Company will have to pay a 3% fee on the purchase, which is $90 (3% of $3,000). Therefore, the total expense for ABC Company related to this transaction is $2,490 ($2,400 cost of goods sold + $90 credit card fee).

The revenue for ABC Company from this transaction is $3,000. Therefore, the net impact on operating income is a $510 increase ($3,000 revenue - $2,490 expense).

Option A is incorrect because it takes into account the revenue and fee but does not subtract the cost of goods sold or expense. Option B is incorrect because it overestimates the impact by including the entire fee as an expense, rather than just 3% of it. Option D is incorrect because it does not account for the cost of goods sold or the credit card fee.

ABC Company Accepted a National Credit Card for a $3,000