Question

Which of the following describes the reporting of interest expense on the income statement?

a) Operating expense
b) Non-operating expense
c) Extraordinary item
d) Comprehensive income

Answer 1

Interest expense is reported as a non-operating expense on the income statement.

Step-by-step explanation:

The correct answer is b) Non-operating expense.

Interest expense is considered a non-operating expense on the income statement. Non-operating expenses are costs or losses that are not related to the direct operations of a business. They include items such as interest expense, which arises from borrowing money to finance the business.

For example, if a company takes out a loan and pays interest on that loan, the interest expense would be reported as a non-operating expense on the income statement.