On a Common-Size Income Statement, Operating Expenses Should Be Stated

question 73

Multiple Choice

On a common-size income statement, operating expenses should be stated as a percentage of:

• A) sales revenue.
• B) net income.
• C) operating income.
• D) total assets.

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Definitions:

Operating Income

Earnings from a company's core business operations, excluding deductions of interest and taxes.

Variable Costing

An accounting method where only variable production costs are charged to product units, excluding fixed overhead costs.

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Operating Income

A measure of a company's profitability, excluding non-operating expenses such as interest and taxes, and non-operating income.