Which of the following is typically considered a cost associated with terminating employees?

• A. Severance pay
• B. Depreciation expense
• C. Interest income
• D. Inventory shrinkage

Answer: (A)

Verified step by step guidance

1. Understand the concept of costs associated with terminating employees. These costs are typically expenses incurred by a company when ending an employee's employment, such as severance pay, outplacement services, or legal fees.
2. Analyze each option provided in the question to determine its relevance to employee termination costs.
3. Option 1: Severance pay. This is a direct cost associated with terminating employees, as it represents compensation provided to employees upon termination.
4. Option 2: Depreciation expense. This is an accounting allocation of the cost of tangible assets over their useful life and is unrelated to employee termination.
5. Option 3: Interest income and Option 4: Inventory shrinkage. Both are unrelated to employee termination costs. Interest income refers to earnings from investments, and inventory shrinkage refers to losses in inventory due to theft or errors.