Jensen Paints had the following transactions during October. Which transaction represents an expense?
A) Purchased office furniture for $1800 on account.
B) Paid $500 in settlement of a loan obtained six months earlier.
C) Received $200 cash for services provided to a client.
D) Purchased stationery for $120 cash.

Question

Quizplus · Accepted Answer

Purchasing stationery for cash represents an expense as it involves an outflow of cash for a consumable item that will be used up in the business operations. The other options are either a purchase of a capital item (office furniture) or a settlement of a liability (loan), or revenue (cash received for services provided).

Jensen Paints Had the Following Transactions During October