Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615



Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem

Income statement for merchandiser

The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (a) selling. (b)administrative, or (c) other?

  1. 1. Advertising expense
  2. 2. Depreciation expense on office equipment
  3. 3. Insurance expense on office equipment
  4. 4. Interest expense on notes payable
  5. 5. Rent expense on office building
  6. 6. Salaries of office personnel
  7. 7. Salary of sales manager
  8. 8. Sales supplies used

To determine

The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Identify: The following expense that should be reported under the differenct section of income statement.


The following table shows the expenses under the selling, administrative, and other section of income statement.

Details Expenses Section
1. Advertisement expense Selling Expense
2. Depreciation expense on store equipment Selling Expense
3. Insurance expense on office equipment Administrative Expense

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