What do you mean by operating expenses?

Question

Answer

Operating expenses are the costs associated with a company's main operating activities and which are reported on its income statement.

For example, a retailer's main operating activities are the buying and selling of merchandise or goods. Therefore, its operating expenses will include:

Cost of goods sold. These costs are reported as operating expenses on the income statement because of the matching principle. The revenues from the sale of merchandise must be matched with the cost of the merchandise that is sold.

Selling, general and administrative expenses (SG&A). These costs are reported as operating expenses on the income statement because they pertain to operating the main business during that accounting period. These costs may have expired, may have been used up, or may not have a future value that can be measured.

Some authors define operating expenses as only SG&A. In other words, they do not include the cost of goods sold as an operating expense. Such a definition will be deficient for calculating a company's operating income. Clearly, the calculation of operating income cannot omit the cost of goods sold.

Answer

Operating expenses an expenses incurred in carrying out an organisation day to day activities, but not directly associated with production.
Like – Sales commission, employees benefits, pensionrent, depreciation ,taxes and etc.

Answer

Operating expenses are those expenditures that a business incurs to engage in any activities not directly associated with the production of goods or services (see an alternative definition at the bottom). These expenditures are the same as selling, general and administrative expenses.

Answer

Operating expenses is a expense become they are not directly affected to the business operating expenses is a indirect expenses

Similar Commerce Doubts

What do you mean by miscellaneous expenses ?

Calculation of Operating profit

On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000?

What is the amount of net profit when merchandising cost = 21650 expenses of doing business operating expenses = ₹480 and sales ₹ 24900 ?

Calculate Operating Ratio from following information Revenue from Operations ` 5,00,000, Sales Returns ` 1,00,000, Rate of Gross loss on Cost 20%, Wages `20,000, Office Expenses ` 75,000, Selling Expenses ` 50,000, Interest on Borrowings ` 20,000.?

Top Courses for CommerceView all

Chapter Notes for Commerce

Economics Class 12

Economics Class 11

NCERT Books & Solutions for Commerce

Economics for CBSE Class 12 Board Examinations

Top Courses for Commerce

Top Courses for Commerce

Related Content

Commerce Courses

Other Courses

How To Prepare?

Related Exams

Company