Clark’s Cleaners is a housekeeping service. The company’s expenses include the

Clark’s Cleaners is a housekeeping service. The company’s expenses include the

A.money the company earns after paying all of its production costs.

B.cleaning supplies and any equipment the company purchases.

C.total amount of money the company receives from its customers.

D.amount of money the company earns from an individual cleaning.

Answer: B. cleaning supplies and any equipment the company purchases.

In business accounting, expenses are defined as the outlay in business in a given period amongst employees or between the business and third parties with the view of earning revenues. In a case where it is a housekeeping service provider such as Clark’s Cleaners then the expenditures would comprise of the necessities intended for use in delivering the cleaning service. This consists of items like detergents and disinfectants, mops, clothes, and any equipment that may have been bought like vacuum cleaners, carpet cleaners, or others.

For instance, Clark’s Cleaners will use cash on various cleaners suitable for various surfaces and other materials they come across in your clients’ houses. They might buy cleaner for everyday use, glass cleaner for windows and mirrors, and degreasers for kitchen format. Some of the expenses that may come under equipment or asset are the costs that are incurred to purchase vacuum cleaners, costs incurred to maintain the equipment or even costs that are incurred to replace the equipment. The firm could also get large equipment like carpet cleaning machines, and pressure washers for certain cleaning operations.

In this connection, let us remember that expenses are not revenue (C), which people regard as the total receipts from selling goods or provision of services; or profit (A, D), which is often described as the excess of total revenue over total expenses. Sales are the total amounts realised from customers before any cost has been subtracted from the amount. Revenue, on the other hand, is the cash, or money received from sales of goods and services while profit is the residual amount after all the costs have been deducted from the revenue. Thus, Clark’s Cleaners can know its costs, set the right prices and even find out whether it is profitable when allocating and controlling necessary headings such as cleaning supplies or equipment.