In the income statement, insurance would be classified as a financial expense. True or False?
The income statement is one of the four basic financial statements. The income statement demonstrates the revenue and expense accounts of the company. The bottom of the income statement demonstrates the net income figure. Revenue and expense accounts are temporary in nature and, as a result, are closed to retained earnings. Thus, retained earnings are increased by the value of net income or decreased by a net loss.
Answer and Explanation:
The correct answer is False
Financial expenses are expenses incurred outside of the normal course of business, as a result of borrowing or earning income from financial investments. Insurance does not fit this description. Rather, insurance is categorized as an operating expense.
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from Accounting 101: Financial AccountingChapter 2 / Lesson 2