Question

The components of the income statement are usually classified as:

a. investing items
b. non-operating items
c. operating items
d. financing items

Answer 1

The components of the income statement are classified as operating items, non-operating items, investing items, and financing items.

Step-by-step explanation:

The components of the income statement are usually classified as:

1. Operating items: These are the revenues and expenses directly related to the core operations of a business. Examples include sales revenue, cost of goods sold, and operating expenses.
2. Non-operating items: These are revenues and expenses that are not directly related to the core operations of a business. They are usually incidental or peripheral activities of the business. Examples include interest income, gains/losses on the sale of assets, and foreign exchange gains/losses.
3. Investing items: These are revenues and expenses related to investments made by the business. Examples include dividends received from investments, gains/losses on the sale of investments, and interest income from loans made to others.
4. Financing items: These are revenues and expenses related to the financing activities of the business. Examples include interest expense, dividends paid to shareholders, and gains/losses on the retirement of debt.