Multiple Choice
Which of the following best describes the primary difference between stocks and bonds?
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1. Introduction to Accounting
Types of Accounting
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Donating to the local animal shelter is an example of which of the following types of expenses?
A
Charitable contribution expense
B
Cost of goods sold
C
Administrative expense
D
Depreciation expense
Verified step by step guidance1
Understand the nature of the expense: Donating to a local animal shelter is a voluntary act aimed at supporting a charitable cause. This type of expense is typically categorized as a charitable contribution expense.
Review the definitions of the other options: Cost of goods sold refers to the direct costs of producing goods sold by a company. Administrative expenses are general overhead costs related to running the business. Depreciation expense accounts for the reduction in value of tangible assets over time.
Compare the options: Charitable contribution expense is the most appropriate category for donations made to a charitable organization, as it directly aligns with the purpose of the expense.
Eliminate incorrect options: Donations are not related to the production of goods (Cost of goods sold), general business operations (Administrative expense), or asset depreciation (Depreciation expense).
Conclude that the correct classification for donating to the local animal shelter is 'Charitable contribution expense.'
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