Question

Which of the following is an expense account? Select all that apply.

1) Cost of Goods Sold
2) Prepaid Expense
3) Wages Payable

Answer 1

Out of the given options, only Cost of Goods Sold is an expense account, representing the costs directly associated with the production of goods sold by a company.

Step-by-step explanation:

The question is asking to identify which of the listed options is an expense account. An expense account is used to track the money spent by a company on goods and services that are consumed, often within a financial year. Of the options provided:

1. Cost of Goods Sold (COGS) is indeed an expense account. It represents the direct costs attributable to the production of the goods sold by a company.
2. Prepaid Expense is not an expense account but instead an asset account. It represents payments made for expenses that will be incurred in the future.
3. Wages Payable is not an expense account but rather a liability account reflecting amounts owed to employees for work performed and not yet paid.

Therefore, the correct answer is that Cost of Goods Sold is the expense account among the choices provided.