Larry's Lobsters keeps its operating cash in an interest-bearing checking account and they earn $150 in interest during the year. Where is that interest shown?
A)In the non-operating income section of the income statement.
B)In the operating income of the income statement.
C)On the balance sheet.
D)As a note on the income statement.
E)On the statement of cash flows.

Question

Quizplus · Accepted Answer

Interest earned from the checking account will appear in the non-operating income section of the income statement.
Key Takeaway: If the interest earned is outside the scope of the company's main operations, which in this case is the lobster business, then the interest earned is noted in the non-operating income section of the income statement.

Larry's Lobsters Keeps Its Operating Cash in an Interest-Bearing Checking