Interest expense is deducted:
A) before gross profit is calculated.
B) before taxes are calculated but after operating expenses.
C) after preferred dividends but before common stock dividends.
D) before operating income is calculated.

Question

Quizplus · Accepted Answer

Interest expense is deducted from earnings before taxes but after all operating expenses have been subtracted from revenues. This means it is considered when calculating net income, not gross profit or operating income, and it is not related to the calculation of dividends.

Interest Expense Is Deducted