Which transaction would be recorded as a business expense in the journal?

Which transaction would be recorded as a business expense in the journal?

• A. Advertising expense
• B. Bicycle purchase
• C. Personal travel
• D. Household repair

Answer: (A)

In bookkeeping, costs that are tied to running the business and are used up in the current period are recorded as expenses, while purchases that create or improve long-term assets are capitalized and depreciated over time. Advertising is a direct operating cost that helps generate revenue in the near term, so it’s recorded as an expense in the journal for the period incurred. A bicycle purchase, unless clearly used as a business asset, would typically be treated as a capital expenditure and recorded as equipment or a vehicle—not as an expense—and then depreciated over its useful life. Personal travel isn’t a business expense unless there’s a proper business purpose with documentation, so it generally wouldn’t appear as a business expense. Household repairs aren’t usually business expenses either, unless they relate to a business property or a dedicated home office with an appropriate allocation; otherwise they’re personal costs and wouldn’t be recorded as business expenses.

In bookkeeping, costs that are tied to running the business and are used up in the current period are recorded as expenses, while purchases that create or improve long-term assets are capitalized and depreciated over time. Advertising is a direct operating cost that helps generate revenue in the near term, so it’s recorded as an expense in the journal for the period incurred.

A bicycle purchase, unless clearly used as a business asset, would typically be treated as a capital expenditure and recorded as equipment or a vehicle—not as an expense—and then depreciated over its useful life. Personal travel isn’t a business expense unless there’s a proper business purpose with documentation, so it generally wouldn’t appear as a business expense. Household repairs aren’t usually business expenses either, unless they relate to a business property or a dedicated home office with an appropriate allocation; otherwise they’re personal costs and wouldn’t be recorded as business expenses.