Let's carefully analyze Lauren's steps to identify where she made an error:
1. Step 1: List all income, including tips and commissions, and list all expenses, including food, entertainment, and clothing.
2. Step 2: Total all the income. Then total all the expenses.
3. Step 3: Add the total of the income and the expenses.
Clearly, let's break this down:
- Step 1 is generally correct; listing all sources of income (tips, commissions, etc.) and expenses (food, entertainment, clothing, etc.) is routine.
- Step 2 is also appropriate. To find net income or balance, you indeed need to total all income and expenses separately.
- Step 3 is where the error occurs. In order to calculate net income, you should subtract the total expenses from the total income, not add them together. Adding expenses to income would not give a correct measure of net income; it would misrepresent the actual financial position by inflating the total.
Conclusion:
Lauren’s error is in Step 3. Instead of adding the total income and total expenses, she should have subtracted the total expenses from the total income to accurately calculate the net income.
Correct Option:
Lauren made an error in step 3 because she should have subtracted the expenses from the income.
