Income before income taxes equals operating income plus nonoperating revenues less nonoperating expenses.

Question

Quizplus · Accepted Answer

This statement is correct according to generally accepted accounting principles (GAAP). Operating income is the profit earned from the company's primary business activities, while nonoperating revenues and expenses include gains or losses from investments, interest income, and other unrelated activities to the main business. Adding nonoperating revenues and subtracting nonoperating expenses from operating income gives us income before income taxes.

Income Before Income Taxes Equals Operating Income Plus Nonoperating Revenues