Question

Which of the following is not an operating expense?

• A. Advertisement expense
• B. Preliminary expense (written off)
• C. Wages
• D. Rent

Hint:

Operating expenses occur regularly during business activities, while preliminary expenses are incurred before operations begin.

Answer 1

The Correct Option is B

Step 1: Understanding Operating Expenses.
Operating expenses are the day-to-day costs incurred by a business during its normal operations.
These include salaries, rent, advertisement, utilities, and other regular business expenses.
They are directly related to running the business and maintaining operations.
Step 2: Non-operating expenses.
Non-operating expenses are costs that are not directly linked to daily operations, such as interest, depreciation, and preliminary expenses written off.
Preliminary expenses are incurred before a business starts operating (like registration fees, promotion costs), and their write-off is a non-operational cost.
Step 3: Analysis of options.
- (1) Advertisement expense: Operating expense — incurred regularly to promote business.
- (2) Preliminary expense (written off): Non-operating — not part of regular operations.
- (3) Wages: Operating expense — part of daily business operations.
- (4) Rent: Operating expense — recurring business cost.
Step 4: Conclusion.
Hence, Preliminary expense (written off) is not an operating expense.