Interest Income and Interest Expense Are Treated as Direct Costs

question 6

True/False

Interest income and interest expense are treated as direct costs and are traced to departments or business segments.

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Definitions:

Retained Earnings

Retained Earnings refer to the portion of net income that a company keeps after paying out dividends to its shareholders, which is then reinvested in the business or used to pay off debt.

Prior Period

A term referring to the financial events or conditions from a previous accounting period.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders, usually in the form of cash.

Stock Dividend

A dividend payment made to shareholders in the form of additional company shares rather than cash.