Final answer:
Factory labor is considered an expense account because it represents the costs associated with the production of goods and is directly recorded as an expense on the income statement.
Step-by-step explanation:
The question you're asking relates to the classification of factory labor costs in accounting. Factory labor, when referring to workers who are directly involved in the manufacturing process, is considered an expense account. This is because the costs associated with factory labor are necessary for the production of goods and therefore, such costs are recorded as part of the Cost of Goods Sold (COGS) on the income statement. They are considered expenses because they are costs that a company incurs to generate revenues.
Now, let's break down the options provided to better understand why factory labor is an expense account.
- A. Expense Account - This is the correct answer. Factory labor is directly related to the production of goods, making it a part of manufacturing overhead. Its expenses are directly tied to the operations and production process and vary with the level of production.
- B. Control Account - This is an account that is used to summarize the total amounts from multiple subsidiary accounts. For instance, Accounts Receivable could be a control account that summarizes individual customer balances.
- C. Subsidiary Account - These are detailed accounts that support a control account. If Accounts Receivable is a control account, then each customer's individual account represents a subsidiary account.
- D. Temporary Account - Temporary accounts are those that are closed at the end of each accounting period. These include revenue, expense, and withdrawal (dividends for corporations) accounts. Although factory labor is an expense and hence goes into an expense account, the term 'temporary account' in this context is not the best description for it.
Therefore, the correct answer to your question is A. Expense Account. Expense accounts are used in accounting to track the costs of operations, which include factory labor as it is a cost involved in producing goods.