Exam (elaborations)
HBS Business CORE - HBX CORe Module_3_Practice
- Course
- HBS Business CORE - HBX CORe
- Institution
- Harvard University
HBS Business CORE - HBX CORe
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Module 3 Practice1) Identify which of the following are real and which are nominal accounts and drag
them to the correct section below.
REAL ACCOUNTS NOMINAL ACCOUNTS
Property, Plant, & Equipment Cost of Goods Sold
Common Stock Rent Expense
Inventory Sales
Other Liabilities Selling, General & Admin Expenses
Accounts Receivable
Additional Paid-In Capital
2) For 2015, suppose Field Enterprises had Gross Profit of $1,150,000 and the following
expenses:
Salaries and Wages Expense $400,000
Building and Utilities Expense $90,000
Other Operating Expenses $50,000
Interest Expense $25,000
Income Tax Expense $32,000
Cost of Goods Sold (COGS) $890,000
What would be Field’s Operating Income for 2015?
$553,000
$260,000
$610,000
correct
$203,000
Operating Income is the profit before taxes and interest. In this example it is the Gross
Profit minus the Salaries and Wages and the Building and Utilities Expenses and the
Other Operating Expenses.
This study source was downloaded by 100000889502333 from CourseHero.com on 08-17-2024 13:13:00 GMT -05:00
https://www.coursehero.com/file/44209965/Module-3-Practicedocx/
, 3) Suppose Pied Piper had Net Income of $1,600,000 for the year 2011. They also had the
following income and expenses:
COGS $7,000,000
SG&A Expense $2,100,000
Other Non-Operating Income $100,000
Interest Income $20,000
Depreciation Expense $350,000
Income Tax Expense $150,000
What would the Operating Income be for the year 2011?
$1,630,000
correct
$1,750,000
$1,650,000
$2,100,000
To get from Net Income to Operating Income, we need to add back the Tax Expense
($150,000) and eliminate the impact of any non-operating income or expenses ($20,000
Interest Income and $100,000 Other Income).
$1,600,000 +150,000 - 20,000 - 100,000 = $1,630,000
This study source was downloaded by 100000889502333 from CourseHero.com on 08-17-2024 13:13:00 GMT -05:00
https://www.coursehero.com/file/44209965/Module-3-Practicedocx/
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