Operating expenses are defined as?

Operating expenses are defined as?

• A. Costs to run the business
• B. Costs that vary with production
• C. Taxes
• D. Proceeds from selling assets

Answer: (A)

Operating expenses are the costs needed to run the business on a day-to-day basis. This includes items like rent, utilities, salaries, marketing, office supplies, and depreciation—the regular costs that support ongoing operations but aren’t tied directly to producing a specific product or service. These expenses are recorded in the period they occur and appear on the income statement as operating expenses. Taxes and income taxes are accounted for separately from operating expenses and shown after operating income. Proceeds from selling assets are not expenses; they are inflows (revenues or gains) and are treated differently on financial statements.

Operating expenses are the costs needed to run the business on a day-to-day basis. This includes items like rent, utilities, salaries, marketing, office supplies, and depreciation—the regular costs that support ongoing operations but aren’t tied directly to producing a specific product or service. These expenses are recorded in the period they occur and appear on the income statement as operating expenses.

Taxes and income taxes are accounted for separately from operating expenses and shown after operating income. Proceeds from selling assets are not expenses; they are inflows (revenues or gains) and are treated differently on financial statements.