Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Clark’s Cleaners is a housekeeping service. The company’s expenses include the cost of cleaning supplies, wages for employees, and utility bills. These expenses are best classified as:

Financing expenses

Non-operating expenses

Operating expenses

Capital expenditures

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Verified step by step guidance

Understand the definition of operating expenses: These are costs incurred during the normal course of business operations, such as wages, utilities, and supplies.

Review the nature of Clark’s Cleaners’ expenses: Cleaning supplies, wages for employees, and utility bills are all directly related to the company’s primary business activity of providing housekeeping services.

Differentiate operating expenses from other types of expenses: Financing expenses are related to borrowing costs, non-operating expenses are unrelated to core business activities, and capital expenditures are investments in long-term assets.

Classify the expenses: Since cleaning supplies, wages, and utility bills are necessary for the day-to-day operations of Clark’s Cleaners, they fall under operating expenses.

Conclude that these expenses are correctly classified as operating expenses because they are essential for the company’s housekeeping service operations.