Which of the following formulas would be used to calculate the net income value

Question

Which of the following formulas would be used to calculate the net income value using only the information in the Model, and not in the Data section?

A B 1 Net Income Model 2 3 Data 4 5 Sales $ 10,000,000 6 Cost of Goods Sold $ 6,400,000 7 Administrative Expenses $ 500,000 8 Selling Expenses $ 900,000 9 Depreciation Expenses $ 750,000 10 Interest Expenses $ 70,000 11 Taxes $ 620,000 12 13 Model 14 15 Gross Profit $ 3,600,000 16 Operating Expenses $ 2,150,000 17 Net Operating Income $ 1,450,000 18 Earnings Before Taxes $ 1,380,000 19 20 Net Income

Explanation / Answer

Net Income = Earnings before taxes - Taxes = B18 - B11

Hence, A is correct

B is incorrect because Net Income = Gross Profit - Operating expense - Interest expense - Tax = B15 - B16 - B10 - B11

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