An example of an expense, as defined in the Conceptual Framework, is:Question 4Select one:a.Dividends paid to shareholders.b.Cash purchase of office equipment.c.Payment to a supplier for purchases made on credit.d.Wages paid on a weekly-basis to employees.
Question
An example of an expense, as defined in the Conceptual Framework, is:Question 4Select one:a.Dividends paid to shareholders.b.Cash purchase of office equipment.c.Payment to a supplier for purchases made on credit.d.Wages paid on a weekly-basis to employees.
Solution
The correct answer is:
d. Wages paid on a weekly-basis to employees.
This is because an expense, as defined in the Conceptual Framework, is a decrease in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. In this case, wages paid to employees on a weekly basis represent an outflow of assets (cash) that decreases the company's equity.
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