In a Multiple-Step Income Statement,interest Expense Usually Is Not Classified

question 139

Multiple Choice

In a multiple-step income statement,interest expense usually is not classified as an operating expense because interest charges:

• A)Do not contribute to the production of revenue.
• B)Stem from the manner in which assets are financed,not the manner in which they are used in business operations.
• C)Relate directly to the cost of goods sold.
• D)The statement is incorrect.Interest usually is classified as an operating expense.

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Definitions:

Administered Prices

Prices that are set by a manufacturer, company, or regulatory body rather than being determined by market supply and demand.

Market Structures

The organizational and competitive characteristics of markets, including aspects like the number of sellers and degree of product differentiation.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded, typically downward sloping, showing an inverse relationship between price and quantity demanded.

Concentration Ratio

A measure used in economics to assess the extent of market control by the top firms in an industry.