Multiple Choice
Which of the following statements is true for both stocks and bonds?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT a type of discretionary expense?
A
Charitable donations
B
Advertising and marketing costs
C
Employee training programs
D
Office rent
Verified step by step guidance1
Step 1: Understand the concept of discretionary expenses. Discretionary expenses are costs that a company chooses to incur but are not essential for its core operations. These expenses are often flexible and can be adjusted based on the company's financial situation.
Step 2: Review the examples provided in the question. Charitable donations, advertising and marketing costs, and employee training programs are all discretionary expenses because they are optional and can be modified or eliminated without directly impacting the company's ability to operate.
Step 3: Analyze the option 'Office rent.' Office rent is not a discretionary expense because it is a fixed cost that is essential for the company to maintain its physical operations. Without paying rent, the company may lose its workspace, which is critical for its functioning.
Step 4: Compare the nature of office rent to the other options. Unlike discretionary expenses, office rent is a necessary operational expense and cannot be easily adjusted or eliminated without significant consequences.
Step 5: Conclude that the correct answer is 'Office rent,' as it does not fall under the category of discretionary expenses.
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