Multiple Choice QuestionDepartmental income statements include:Multiple choice question.only indirect expensesdirect and indirect expensesonly direct expenses
Question
Solution
Departmental income statements include both direct and indirect expenses.
Here's why:
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Direct Expenses: These are costs that can be directly attributed to a specific department. For example, the salary of the sales department manager would be a direct expense of the sales department.
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Indirect Expenses: These are costs that are not directly linked to a single department but are shared across multiple departments. For example, the cost of heating in a building would be an indirect expense, as it benefits all departments within the building.
Therefore, a departmental income statement includes both direct and indirect expenses to give a complete picture of the department's total expenses.
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