Question

Which of the following items are classified as operating items on the income statement? (Select all that apply.)

a)loss due to hurricane
b)loss on sale of long-term investment
c)employee salary expense
d)utility expense

Answer 1

Employee salary expense and utility expense are classified as operating items on the income statement.

Step-by-step explanation:

The operating items on an income statement refer to expenses and revenues that are directly related to a company's core business operations. They reflect the day-to-day activities of the company. From the given options, the following items are classified as operating items:

• Employee salary expense: This represents the cost of compensating employees for their work.
• Utility expense: This refers to the expenses incurred for utilities like electricity, water, and gas, which are necessary for the operation of the business.

Loss due to hurricane and loss on sale of long-term investment are not classified as operating items, as they are not related to the core operations of the business.