Which item is not a business operation expense?

Which item is not a business operation expense?

• A. Bicycle purchase for son
• B. Advertising expense
• C. Subcontractor payment
• D. Equipment rental

Answer: (A)

Costs that count as business operation expenses are those needed to run the business and generate revenue. A bicycle purchase for your son is a personal purchase and has no relation to operating or promoting the business, so it isn’t considered a business expense. The other items fit the purpose of operating the business: advertising is a marketing cost, payments to subcontractors are outsourcing labor costs, and equipment rental covers using assets needed for day-to-day operations. If a purchase were used partly for business and partly personal, you’d typically allocate and expense only the portion used for business.

Costs that count as business operation expenses are those needed to run the business and generate revenue. A bicycle purchase for your son is a personal purchase and has no relation to operating or promoting the business, so it isn’t considered a business expense.

The other items fit the purpose of operating the business: advertising is a marketing cost, payments to subcontractors are outsourcing labor costs, and equipment rental covers using assets needed for day-to-day operations. If a purchase were used partly for business and partly personal, you’d typically allocate and expense only the portion used for business.