Question

True or false: Interest expense and income tax expense are considered general and administrative expenses and, therefore, are included on the general and administrative expense budget.

Answer 1

Answer:

The statement is: False.

Explanation:

The cost of borrowing money is the Interest Expense. On an Income Statement, interest expense is shown as a non-operating expense. Tax expense represents the total amount of taxes an individual or organization is responsible for. On an Income Statement, tax expenses are recorded as tax payable.

Neither interest expense nor income tax expense is considered in the general or administrative budget since they are complicated to estimate because both of them rely on the actual production of the firm during the course of its operations.