A company car used for general sales activities is depreciated under which cost category?

A company car used for general sales activities is depreciated under which cost category?

• A. Cost Of Goods Sold
• B. General And Administrative Costs
• C. Selling Expenses
• D. Marketing

Answer: (B)

Costs are classified by the function they support. A company car used to handle general sales activities serves as a tool that supports selling and client outreach, but it isn’t a direct cost tied to a specific job or to a particular marketing campaign. That makes the depreciation an overhead expense allocated to General And Administrative Costs, since it reflects the ongoing support and operations that enable the business to sell, rather than a direct cost of production or a specific marketing/selling expense. If the vehicle were dedicated to traceable, direct selling activities or advertising campaigns, it might fit a different category, but for general sales support, G&A is the appropriate placement.

Costs are classified by the function they support. A company car used to handle general sales activities serves as a tool that supports selling and client outreach, but it isn’t a direct cost tied to a specific job or to a particular marketing campaign. That makes the depreciation an overhead expense allocated to General And Administrative Costs, since it reflects the ongoing support and operations that enable the business to sell, rather than a direct cost of production or a specific marketing/selling expense. If the vehicle were dedicated to traceable, direct selling activities or advertising campaigns, it might fit a different category, but for general sales support, G&A is the appropriate placement.