The income statement of Ride-on Motors, an automotive manufacturer, for the year ended December 31, 20x1, reported revenues $7,400 million and cost of sales of $6,000 million.In addition, it reported other operating expenses of $900 million, a loss of $2 million on the sale of a business, and net financing income of $200 million.Tax expense for the year was $100 million.Compute the amount of net income or loss that Ride-on Motors reported for 20x1.
A)net income of $198 million
B)net income of $698 million
C)net loss of $698 million
D)net income of $598 million
E)net loss of 598 million

Question

Quizplus · Accepted Answer

Net income can be calculated as follows:

Revenues - Cost of sales - Other operating expenses - Loss on sale of business + Net financing income - Tax expense
= $7,400 million - $6,000 million - $900 million - $2 million + $200 million - $100 million
= $598 million

Therefore, the correct answer is D, net income of $598 million for 20x1.

The Income Statement of Ride-On Motors, an Automotive Manufacturer, for the Year