Which term describes what a manufacturer spends for goods or services?

• A. Revenue
• B. Cost
• C. Asset
• D. Profit

Answer: (B)

Verified step by step guidance

1. Understand the question: The problem is asking for the term that describes what a manufacturer spends for goods or services. This is a fundamental concept in Financial Accounting.
2. Clarify the options: The options provided are Revenue, Cost, Asset, and Profit. Each term has a specific meaning in accounting, and we need to identify the one that matches the description.
3. Define the term 'Cost': In accounting, 'Cost' refers to the amount a company spends to acquire goods or services. This includes expenses such as raw materials, labor, and overheads necessary for production.
4. Compare 'Cost' with other options: Revenue refers to the income generated from sales; Asset refers to resources owned by the company; Profit is the financial gain after deducting expenses from revenue. None of these terms describe what a manufacturer spends for goods or services.
5. Conclude that 'Cost' is the correct term: Based on the definitions and comparison, 'Cost' accurately describes the expenditure a manufacturer incurs for goods or services.