Which category on an income statement would include the truck insurance payment?

Which category on an income statement would include the truck insurance payment?

• A. Cost of goods sold
• B. Administrative expenses
• C. Operating expenses
• D. Financing expenses

Answer: (C)

Truck insurance is a cost tied to keeping the business running and its vehicles available for service, so it belongs in operating expenses. It isn’t a direct cost of producing a specific landscaping job (those direct costs would go under cost of goods sold), and it isn’t a financing expense (which would be interest or other borrowing costs). While vehicle costs can sometimes be categorized with administrative overhead, the standard placement for ongoing vehicle insurance is within operating expenses, alongside other costs of operating the business.

Truck insurance is a cost tied to keeping the business running and its vehicles available for service, so it belongs in operating expenses. It isn’t a direct cost of producing a specific landscaping job (those direct costs would go under cost of goods sold), and it isn’t a financing expense (which would be interest or other borrowing costs). While vehicle costs can sometimes be categorized with administrative overhead, the standard placement for ongoing vehicle insurance is within operating expenses, alongside other costs of operating the business.