How are items classified on the income statement?
Understand the Problem
The question is asking about the classification of items on an income statement, which typically includes revenues, expenses, gains, and losses. It seeks to understand how these items are organized and reported in financial statements.
Answer
Operating and non-operating items; selling and administrative expenses.
Items on a classified income statement are divided into operating and non-operating items, with further categorization of operating expenses into selling and administrative expenses.
Answer for screen readers
Items on a classified income statement are divided into operating and non-operating items, with further categorization of operating expenses into selling and administrative expenses.
More Information
A classified income statement, also known as a multi-step income statement, provides more detailed financial information compared to an unclassified income statement.
Tips
Common mistakes include misclassifying expenses and not properly separating non-operating items from operating items.
Sources
- Introduction to Inventories and the Classified Income Statement - learn.saylor.org
- What is a Classified Income Statement? - SuperfastCPA - superfastcpa.com
- Classified income statement definition - AccountingTools - accountingtools.com
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