Which transaction involved advertising expense?

Which transaction involved advertising expense?

• A. July 4 advertising
• B. July 24 subcontractor
• C. July 7 equipment rental
• D. July 17 bicycle

Answer: (A)

Advertising costs are recorded as an operating expense when the business spends money to promote itself. The entry dated July 4 labeled advertising directly reflects this type of cost, so it is the advertising expense. In contrast, the July 24 entry for a subcontractor represents a labor or service expense, the July 7 entry for equipment rental is a rental expense, and the July 17 bicycle would typically be recorded as an asset or inventory rather than an advertising expense.

Advertising costs are recorded as an operating expense when the business spends money to promote itself. The entry dated July 4 labeled advertising directly reflects this type of cost, so it is the advertising expense. In contrast, the July 24 entry for a subcontractor represents a labor or service expense, the July 7 entry for equipment rental is a rental expense, and the July 17 bicycle would typically be recorded as an asset or inventory rather than an advertising expense.