Which of the following is NOT considered a major expense category in financial accounting?

• A. Depreciation Expense
• B. Cost of Goods Sold
• C. Interest Revenue
• D. Salaries and Wages Expense

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of expense categories in financial accounting. Expenses are costs incurred by a business to generate revenue and operate effectively. Common expense categories include operating expenses, cost of goods sold, and non-operating expenses.
2. Step 2: Review the provided options: Depreciation Expense, Cost of Goods Sold, Interest Revenue, and Salaries and Wages Expense. Identify which of these are typically classified as expenses in financial accounting.
3. Step 3: Clarify that Depreciation Expense represents the allocation of the cost of tangible assets over their useful life, and it is considered an operating expense.
4. Step 4: Note that Cost of Goods Sold (COGS) is a major expense category that represents the direct costs of producing goods sold by a company, such as materials and labor.
5. Step 5: Recognize that Interest Revenue is not an expense but rather a form of income earned from interest on investments or loans. Salaries and Wages Expense, on the other hand, is a major operating expense related to employee compensation.