Which of the Following Describes the Reporting of Interest Expense

question 99

Multiple Choice

Which of the following describes the reporting of interest expense on the income statement?

• A)It is reported as an operating expense.
• B)It is a component of operating income.
• C)It is deducted from operating income.
• D)It is added to operating income.

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Definitions:

Federal Unemployment Compensation Tax

A tax imposed on employers to fund the federal government's oversight of the state unemployment insurance programs.

Quick Ratio

A liquidity metric that evaluates a company's ability to pay its current liabilities without needing to sell inventory, calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.

Current Liabilities

Obligations or debts that a company is expected to pay off within one year or within its normal operating cycle.

Quick Ratio

A measure of a company’s ability to meet its short-term obligations using its most liquid assets, excluding inventory.