Which of the Following Statements Is False

question 18

Multiple Choice

Which of the following statements is false?

• A)The income statement covers a period of time.
• B)A loss on the sale of plant and equipment is considered a peripheral activity and is not reported on the income statement.
• C)Rent expense is a component of operating income.
• D)Interest expense is not a component of operating income.

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Definitions:

Speculative Motive

The intent to hold cash or other assets for the purpose of benefiting from future market movements.

Precautionary Motive

The desire to hold cash or liquid assets to guard against unforeseen future needs and emergencies.

Transaction Motive

The need for cash to meet immediate and anticipated demands for payment, a key reason for holding cash in business.

Speculative Motive

The intention to hold cash or other assets in anticipation of future market fluctuations to gain financial advantages.