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.

Question

Quizplus · Accepted Answer

Interest expense is considered a non-operating expense because it reflects the cost of financing the assets, not the cost of using them in operations to generate revenue. It is part of the company's financing activities, not its operating activities.

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