Which of the following is an expense?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

Which of the following is an expense?

Explanation:
In bookkeeping, expenses are costs that have been used up in earning revenue and are shown on the income statement as deductions from profit. Rent fits this because paying for the use of premises is a ongoing cost of running the business during the period, which reduces profit. The other items are not expenses: sales revenue is income earned from selling goods, stock is an asset representing goods held for sale, and cash at bank is also an asset. When rent is paid, you would debit the rent expense and credit cash or bank (or a payable if unpaid).

In bookkeeping, expenses are costs that have been used up in earning revenue and are shown on the income statement as deductions from profit. Rent fits this because paying for the use of premises is a ongoing cost of running the business during the period, which reduces profit. The other items are not expenses: sales revenue is income earned from selling goods, stock is an asset representing goods held for sale, and cash at bank is also an asset. When rent is paid, you would debit the rent expense and credit cash or bank (or a payable if unpaid).

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