Which is NOT an example of an expense a) advertising b)insurance

Which is NOT an example of an expense

a) advertising

b)insurance

c)dividends

d)depreciation

Answer: c)dividends

Dividends not being a kind of expenses would be a wrong answer. Dividends are a conception of using the company’s profit for shareholder return. These ratios refer to an organization’s distribution of “retained earnings” and do not constitute an accounting expense.

On the contrary, expenditures refer to disbursements of money by a company to either generate revenues or keep operations running smoothly. Illustrations of expenses include advertising, which goes with the cost of by spreading the awareness of products or services; insurance, which covers the risks and potential liabilities; and depreciation, which accounts for the gradual decrease in the value of the fixed assets that are because of the effects of wear and tear or obsolescence.

By contrast to the expense which diminishes a company’s profitability, dividends are paid from the retained earnings of a company after deduction of all expenses and taxes to shareholders in recognition for their investments’ returns to them as they are distribution of profits.