Which of the Following Transactions Results in the Recognition of an Expense

question 214

Multiple Choice

Which of the following transactions results in the recognition of an expense?

• A) Expiration of the usefulness of equipment during the accounting period
• B) Payment on an account payable
• C) Declaration and payment of a dividend
• D) Payment on the principal portion of a loan

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Definitions:

Rental Rate

The price paid for the temporary use of a good, service, or property, typically expressed as a fee per time period.

Cost Minimization

The process of reducing expenses to the lowest possible level while still achieving the desired level of output or quality.

Normal Rate Of Return

A rate of return on capital that is just sufficient to keep owners and investors satisfied. For relatively risk-free firms, it should be nearly the same as the interest rate on risk-free government bonds.

Economic Loss

A situation where the cost of making a product is greater than the revenue gained from selling it, resulting in a negative economic outcome.