Which of the following costs is most likely to be the largest expense item on the statement of earnings of a merchandising chain such as Walmart?
A) Income tax expense
B) Wage, salary and benefits expense
C) Advertising
D) Cost of Sales

Question

Quizplus · Accepted Answer

Cost of sales, also known as cost of goods sold, represents the direct cost of the products sold by the merchandising chain, including the cost of inventory, transportation, and any direct labor costs associated with production. For a company like Walmart, which operates thousands of stores and sells vast quantities of goods, the cost of sales is likely to be its largest expense item on the statement of earnings. Income tax expense, wage, salary and benefits expense, and advertising are all important cost categories, but they are generally smaller than the cost of sales for a retail chain.

Which of the Following Costs Is Most Likely to Be