Times Interest Earned Is Computed as

question 74

Multiple Choice

Times interest earned is computed as

• A) net income plus interest expense, divided by interest expense
• B) income before income tax plus interest expense, divided by interest expense
• C) net income divided by interest expense
• D) income before income tax divided by interest expense

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure a company's bookkeeping system is mathematically correct.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to net income or loss.

Insurance Expense

The amount a company spends on insurance policies to cover various risks, recorded as an expense in the accounting period in which it is incurred.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.