Question

Which of the following is classified in an income statement as a nonoperating activity?

Cost of goods sold

Advertising expense

Interest expense

Freight-out

Answer 1

INterest expense is the correct answer.

Operating activites are the activities that are related to the nature of busines…

Interest expense is not related to the nature of business it is considered as non operating activity because it is paid to the lendors from whom we borrow the amount, it is not the nature of business borrowing and lending money.

Proforma of Income statement

Particulars

Amount

Sales

xxx

Cost of goods sold

xxx

Profit

xxx

Operating expenses :

Selling expenses

xxx

Advertising

xxx

Commission expenses

xxx

Administrative expenses

xxx

Total operating expenses

xxx

Operating income

xxx

Non operating or other :

Interest revenues

xxx

gain on sale of investments

xxx

Interest expense

xxx

Loss from law suit

xxx

Total non operating

xxx

Net income

xxx