On the income statement of a merchandising company, interest income and interest expense are reported:
A) By offsetting interest income and interest expense and showing the excess as an operating revenue or expense
B) As separate items of other income and expense below the net operating income or loss
C) As part of cost of goods sold
D) By showing interest income as additional sales revenue and interest expense as an operating expense

Question

Quizplus · Accepted Answer

Interest income and interest expense are typically reported as separate items under other income and expenses, not included in the calculation of net operating income or loss. This is because they are considered non-operating activities, unrelated to the core business operations of a merchandising company.

On the Income Statement of a Merchandising Company, Interest Income