Which Is Not an Expense Account?
An expense account is a type of account in financial accounting that is used to track costs incurred by a company during its normal operations. Expense accounts are typically used to record costs such as rent, utilities, salaries, and supplies.
There are a number of different types of expense accounts, each of which is used to track a specific type of cost. For example, there are expense accounts for:
- Rent
- Utilities
- Salaries
- Supplies
- Marketing
- Advertising
- Travel
- Entertainment
In general, an expense account is considered to be any account that is used to track a cost that is incurred in the ordinary course of business. However, there are some types of costs that are not considered to be expenses. These include:
- Capital expenditures
- Deferred charges
- Investments
- Loans
- Revenue
Which Is Not an Expense Account?
The answer to the question "Which is not an expense account?" depends on the specific definition of an expense account that is being used. However, in general, the following types of costs are not considered to be expenses:
- Capital expenditures are costs that are incurred to acquire or improve long-term assets, such as buildings, equipment, or land. Capital expenditures are not expensed immediately, but are instead depreciated over the useful life of the asset.
- Deferred charges are costs that are incurred in advance and that will benefit the company over a period of time. Deferred charges are not expensed immediately, but are instead amortized over the period of benefit.
- Investments are assets that are held for the purpose of generating income or appreciation. Investments are not expensed, but are instead accounted for as assets on the balance sheet.
- Loans are amounts that are owed to another party. Loans are not expensed, but are instead accounted for as liabilities on the balance sheet.
- Revenue is income that is earned by a company. Revenue is not an expense, but is instead accounted for as a credit on the income statement.
Example Questions
Here are some example questions that can be used to test a person’s understanding of which types of costs are considered to be expenses:
- Which of the following is an expense account?
- Rent
- Depreciation
- Bonds payable
- Goodwill
- Which of the following is not an expense account?
- Utilities
- Interest expense
- Long-term debt
- Sales revenue
Conclusion
An expense account is a type of account in financial accounting that is used to track costs incurred by a company during its normal operations. Expense accounts are typically used to record costs such as rent, utilities, salaries, and supplies.
However, there are some types of costs that are not considered to be expenses. These include capital expenditures, deferred charges, investments, loans, and revenue.
