A likely method that managers use for classification shifting is to report certain operating expenses as: Multiple Choice revenues. 1. non operating expenses. 2. income tax expense. 3. assets.

Question

Business

Isabel

10 July, 22:59

A likely method that managers use for classification shifting is to report certain operating expenses as: Multiple Choice revenues. 1. non operating expenses. 2. income tax expense. 3. assets.

+1

Answers (1)

Know the Answer?

Zachariah Macdonald · Answer 1

Managers may engage in classification shifting by reporting operating expenses as non operating expenses to inflate reported operating income.

Explanation:

The expenses that are not related to the principle activities of a business is treated as non-operating expense

A non-operating expense is an expense incurred from activities unrelated to core operations.

Non-operating expenses are deducted from operating profits and accounted for at the bottom of a company's income statement.

Examples of non-operating expenses include interest payments, dividends and capital gains or losses

The main difference between a Operating and Non-operating expense is Operating expenses refers to all the costs an individual incur to bring a product or service to market whereas a Non-operating expenses refers to the costs that are not related to normal business operations, such a paying the interest.