Multiple Choice
Which of the following is included in the compensation of employees in financial accounting?
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1. Introduction to Accounting
Types of Accounting
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Interest and dividends are classified as what type of income in financial accounting?
A
Capital income
B
Deferred income
C
Operating income
D
Non-operating income
Verified step by step guidance1
Understand the classification of income in financial accounting. Income is generally categorized into operating income and non-operating income based on its source.
Operating income refers to the revenue generated from the core business activities of a company, such as sales of goods or services.
Non-operating income includes revenue that is not derived from the primary operations of the business. Examples include interest earned on investments and dividends received from other companies.
Analyze the given options: Capital income refers to funds raised for long-term investments, deferred income is revenue received in advance but not yet earned, and operating income is related to core business activities.
Conclude that interest and dividends are classified as non-operating income because they are not generated from the company's primary business operations.
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