What account class would cash prize payment be under?

A. Operating expense
B. Cost of Goods Sold
C. Asset
D. Expense
E. Liability

I'm stuck between A, B, D.

Help. thanks.

To determine the correct account class for cash prize payment, let's go through the options:

A. Operating expense: Operating expenses are costs incurred in the normal day-to-day operations of a business. While some cash prize payments may be classified as operating expenses (e.g., employee bonuses), it would depend on the specific context of the payment.

B. Cost of Goods Sold: Cost of Goods Sold (COGS) accounts for the direct costs associated with producing or purchasing the goods sold by a company. Cash prize payments are not typically considered a direct cost of goods sold, so this option is unlikely to be the correct answer.

C. Asset: Assets represent resources owned by a company that have future economic value. While cash is an asset, cash prize payments are not typically classified as assets because they are payments made by the company using its existing cash resources.

D. Expense: Expenses represent costs incurred by a company to generate revenue. Cash prize payments are often considered expenses since they are a form of compensation or incentive offered by the company, and they are usually recorded as such.

E. Liability: Liabilities represent obligations or debts owed by a company. Cash prize payments are not liabilities as they do not represent any debt or obligation of the company.

Based on the analysis above, it seems that the most appropriate account class for cash prize payment is D. Expense.