Question

Which of these items would be accounted for as an expense?

• A. Repayment of bank loan
• B. Dividend to stock holders
• C. The purchase of land
• D. Payment of current period rent

Answer 1

The correct option is D Payment of current period rent

All expense are to be debited to profit & loss account. Below are the explanation for each of the item:

1) Repayment of bank loan- This will reduce the liability

2) Dividend to stock holders- This will be an appropriation of profit and will be charged to profit & loss appropriation account.

3) Purchase of Land- Land is a fixed assets and will be shown in balance sheet.

4) Rent is an expense and to be accounted as an expense.