In a multiple-step income statement,income taxes are not classified as operating expenses because:
A)Income taxes do not contribute to the production of revenue.
B)Income taxes stem from the manner in which assets are financed,not the manner in which they are used in business operations.
C)Not all forms of business organization are subject to income taxes.
D)The statement is incorrect;income taxes are classified as operating expenses.

Question

Quizplus · Accepted Answer

Income taxes are not classified as operating expenses because they do not directly contribute to the production of revenue. They are considered a separate line item after operating income to reflect the net income accurately.

In a Multiple-Step Income Statement,income Taxes Are Not Classified as Operating