Is wage expense an asset?
Understand the Problem
The question is asking whether wage expense is classified as an asset in accounting terms. It seems to be seeking clarification on how wages are treated in financial statements.
Answer
An expense account
The final answer is an expense account.
Answer for screen readers
The final answer is an expense account.
More Information
Wage expenses are recorded on the income statement and typically reduce the company's net income. They are considered variable costs because they can fluctuate depending on the number of hours worked or the employees employed.
Tips
A common mistake is to classify wage expense as an asset due to its cost nature. However, assets provide future economic benefits, while expenses are costs incurred to generate revenue.
Sources
- Is the wages expense account an asset, liability, equity, revenue, or expense account? - homework.study.com
- Wage Expense: The Cost to Pay Hourly Employees - Investopedia - investopedia.com
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