Calculating operational profit from financial statements

Steps:

• Identify revenue and operating expenses from the income statement for the year ended 30 June 2019.
• Subtract cost of goods sold and operating expenses (e.g., salaries, rent) from total revenue to find gross profit, then adjust for any non-operating items.
• Exclude non-operating income/expenses like interest or taxes to isolate profit from operations.
• Sum the result: revenue $500,000 minus operating costs$346,000 equals $154,000.

Why D is correct:

• Profit from operations is revenue minus operating expenses only, per standard accounting definition, yielding $154,000.

Why the others are wrong:

• A: Includes non-operating expenses, understating by $50,000.
• B: Subtracts taxes prematurely, reducing by $40,000.
• C: Likely a miscalculation of net profit after all deductions.

Final answer: D