Expense is defined as?

Expense is defined as?

• A. Wages
• B. Interest payable
• C. Raw materials
• D. Cost incurred by a business other than material and labour costs

Answer: (D)

Expense refers to costs charged to the income statement that are not directly tied to producing goods. Direct materials and direct labour are production costs and usually flow into inventory or cost of goods sold, rather than being treated as expenses in the period. The remaining costs—overheads and other non-production costs like rent, utilities, depreciation, and administrative items—are those that are expensed. So the statement that expense is the cost incurred by a business other than material and labour costs best captures this idea. Wages and raw materials are direct production costs, so they don’t fit this broader expense definition, while other non-production costs do.

Expense refers to costs charged to the income statement that are not directly tied to producing goods. Direct materials and direct labour are production costs and usually flow into inventory or cost of goods sold, rather than being treated as expenses in the period. The remaining costs—overheads and other non-production costs like rent, utilities, depreciation, and administrative items—are those that are expensed. So the statement that expense is the cost incurred by a business other than material and labour costs best captures this idea. Wages and raw materials are direct production costs, so they don’t fit this broader expense definition, while other non-production costs do.