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Which of the following is not a part of finance cost (in the statement of profit and loss)?
- a)Bank charges
- b)Interest paid on debentures
- c)Interest paid on public deposits
- d)Loss on issue of debentures
Correct answer is option 'A'. Can you explain this answer?
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Which of the following is not a part of finance cost (in the statement...
Finance Cost in the Statement of Profit and Loss
Finance cost in the statement of profit and loss refers to the expenses incurred by a company in relation to obtaining and maintaining financing for its operations. It includes various expenses related to interest payments and other costs associated with borrowing funds.
Components of Finance Cost
- Interest paid on debentures: This refers to the interest expense incurred on debentures issued by the company to raise funds. It is a key component of finance cost.
- Interest paid on public deposits: This represents the interest expense paid by the company on public deposits accepted to meet its financing requirements. It is also a significant part of finance cost.
- Loss on issue of debentures: This refers to the loss incurred by the company when issuing debentures at a discount or other unfavorable terms. While not a direct interest expense, it is included in finance cost as it reflects the cost of raising funds through debentures.
- Bank charges: Bank charges are not typically considered a part of finance cost in the statement of profit and loss. Instead, they are classified under other operating expenses or administrative expenses.
Therefore, among the options provided, bank charges are not a part of finance cost in the statement of profit and loss. The other three components mentioned (interest paid on debentures, interest paid on public deposits, and loss on issue of debentures) are integral parts of finance cost and are included in the calculation of the company's overall financing expenses.
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Which of the following is not a part of finance cost (in the statement...
They are shown under other expenses.
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Which of the following is not a part of finance cost (in the statement of profit and loss)?a)Bank chargesb)Interest paid on debenturesc)Interest paid on public depositsd)Loss on issue of debenturesCorrect answer is option 'A'. Can you explain this answer?
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