Multiple Choice
Spending on testing a product before shipment to customers is classified as which type of quality cost?
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1. Introduction to Accounting
Types of Accounting
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Which one of the following accounts is classified as a noncash expense?
A
Salaries Expense
B
Interest Expense
C
Depreciation Expense
D
Utilities Expense
Verified step by step guidance1
Understand the concept of a noncash expense: A noncash expense is an expense that does not involve an actual outflow of cash during the accounting period. Instead, it represents an allocation of costs over time, such as depreciation or amortization.
Review the provided options: Salaries Expense, Interest Expense, Depreciation Expense, and Utilities Expense. Identify which of these involves no cash outflow.
Analyze each option: Salaries Expense involves cash payments to employees, Interest Expense involves cash payments for borrowing, and Utilities Expense involves cash payments for services like electricity or water. These are all cash expenses.
Focus on Depreciation Expense: Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It does not involve any cash outflow; instead, it is an accounting entry to reflect the wear and tear or obsolescence of the asset.
Conclude that Depreciation Expense is the correct answer because it is the only noncash expense among the options provided.
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