Hickory Furniture Company paid for the following costs during the month of May:

Inventory purchases	$	40,000
Advertising costs		8,000
Delivery costs		2,000

Hickory sold $32,000 of the inventory and has agreed to pay warranty expenses for its customers. These are expected to be $1,600 and occur evenly over the next four months (i.e., starting in June).

Which of the following statements best describes expenses?

Multiple Choice

• They are recorded in the accounting period when they are purchased.

• They consist of amounts paid for consumable items and services rendered to the organization during the accounting period.

• They are the expired costs or assets "used up" during the accounting period.

• They consist of cash payments to employees during the period for services rendered.