Multiple Choice
Which of the following is a disadvantage of equity capital?
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1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
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A rent payment is an example of which type of expense?
A
Operating expense
B
Capital expense
C
Non-operating expense
D
Financing expense
Verified step by step guidance1
Understand the definition of an operating expense: Operating expenses are costs incurred during the normal course of business operations, such as rent, utilities, and salaries.
Review the definition of a capital expense: Capital expenses are costs related to acquiring or upgrading long-term assets, such as purchasing equipment or property.
Examine the definition of a non-operating expense: Non-operating expenses are costs not related to the core business operations, such as interest payments or losses from investments.
Understand the definition of a financing expense: Financing expenses are costs associated with borrowing money, such as interest on loans or bonds.
Determine that rent payment is a recurring cost necessary for the day-to-day operations of a business, which classifies it as an operating expense.
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