A company has borrowed money from a bank. Under the FASB's system, the amount of money the company owes to the bank at the end of the year is an example of an expense.

Question

Quizplus · Accepted Answer

The amount of money the company owes to the bank is not an expense. It is a liability that will be reported on the company's balance sheet. Expenses are costs incurred by the company in its day-to-day operations, such as salaries, rent, and supplies.

A Company Has Borrowed Money from a Bank