Question

60. Which of the following is an operating income? (A) Sale of Merchandise (B) Interest income (C) Dividend income (D) Profit on the sale of old car not profitability ratio? BSEB​

Answer 1

Answer:

Interest income

please follow

Answer 2

(A) Sale of Merchandise

• Operating income refers to revenue earned after adjusting all the expenses made in operations and calculating depreciation being subtracted. It is the income earned by the business after performing regular operations and by using extraordinary methods.
• The sale of merchandise or the sale of goods is the primary source of operating income. The basic operation of the business is to sell goods and services based on the nature of the business.
• Interest Income may or may not be a part of operating income as it depends upon the investment on which the income is being received.
• Dividend Income is not a part of operating income as it is not earned by performing regular operations but through extraordinary methods.
• Profit on the sale of goods is considered as operating profit but the profit made on the sale of any asset is not taken into account as it is not the basic motive of the business.

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