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In the Profit and Loss Account, which of the following is considered an expense?
In the Profit and Loss Account, which of the following is considered an expense?
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Practice Questions
1 question
Q1
In the Profit and Loss Account, which of the following is considered an expense?
Sales Revenue
Drawings
Cost of Goods Sold
Capital Introduced
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Cost of Goods Sold is considered an expense in the Profit and Loss Account.
Questions & Step-by-step Solutions
1 item
Q
Q: In the Profit and Loss Account, which of the following is considered an expense?
Solution:
Cost of Goods Sold is considered an expense in the Profit and Loss Account.
Steps: 5
Show Steps
Step 1: Understand what a Profit and Loss Account is. It shows a company's revenues and expenses over a specific period.
Step 2: Identify what an expense is. An expense is a cost that a business incurs to earn revenue.
Step 3: Learn about Cost of Goods Sold (COGS). COGS is the direct cost of producing the goods sold by a company.
Step 4: Recognize that COGS is deducted from revenue to calculate gross profit.
Step 5: Conclude that since COGS is a cost incurred to generate sales, it is classified as an expense in the Profit and Loss Account.
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