Future Business Leaders of America (FBLA) Marketing Practice Test

What do long-term expenses typically include?

1. Marketing research costs

2. Raw materials

3. Vehicles

4. Employee salaries

The correct answer is: Vehicles

Long-term expenses typically refer to costs that a business incurs which will benefit the company over an extended period, usually beyond one year. Vehicles are a prime example of long-term expenses because they are significant investments that are essential for business operations, such as transportation of goods, staff, and equipment. Vehicles can last several years, thereby providing long-term utility to the business. In contrast, marketing research costs and raw materials are generally viewed as short-term expenses. Marketing research costs are often incurred for a specific project or campaign and do not provide ongoing benefits over years. Raw materials are needed to produce products but are consumed in the production process and are thus tied to the immediate operational cycle. Employee salaries, while a significant ongoing expense, also fall into the category of operating expenses rather than long-term capital investments, as they are paid out regularly based on a short-term timeframe, typically on a monthly basis. Therefore, vehicles stand out as the correct representation of long-term expenses due to their lasting value and capital investment nature.