Financial Statements of a Company · Class 12 · CBSE · Commerce Accountancy
In the context of the Statement of Profit and Loss, how are 'Finance Costs' defined or categorized?
Practice question from Financial Statements of a Company (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
medium · MCQ · Q-D09C8C
In the context of the Statement of Profit and Loss, how are 'Finance Costs' defined or categorized?
- A.Only interest paid on bank overdrafts
- B.Interest expense, other borrowing costs, and applicable net gain/loss on foreign currency transactionsCorrect answer
- C.Dividend paid on equity shares and preference shares
- D.Brokerage and commission paid on issue of shares
Solution
Finance costs comprise interest expense, other borrowing costs incurred in connection with borrowing of funds, and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs.
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