What does operating income mean on the CPA exam?
Operating income. Profit from the core business, before interest and tax. It isolates operating performance from how the entity is financed.
Which CPA exam sections use operating income?
Operating income appears in the BAR section of the CPA exam.
Related terms
- ordinary income: Income taxed at the regular graduated rates rather than at preferential capital gain rates.
- net investment income: Interest, dividends, capital gains, rents, royalties and income from passive businesses, less the deductions allocable to them.
- personal holding company income: Mostly passive income -- dividends, interest, rents, royalties -- which, with concentrated ownership, triggers a penalty tax on undistributed amounts.
- qualified business income: The net income from a domestic pass-through trade or business, excluding investment income and reasonable compensation.
- operating segment: A component of a public entity that may recognize revenues and incur expenses, whose operating results the chief operating decision maker reviews to allocate resources and assess performance, and for which discrete financial information is available.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.