Which Items Below Would Be Classified as Operating Expenses

question 21

Multiple Choice

Which items below would be classified as operating expenses?

• A) Depreciation, capital leases, operating profit.
• B) Interest expense, interest income, rent expense.
• C) Accounts payable, lease payments, depreciation.
• D) Advertising, selling and administrative, repairs and maintenance.

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, a critical component in lease accounting.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing assets, liabilities, and shareholder equity.

Liability

A financial obligation or debt owed by a company to others, often categorized as current or long-term.