For most businesses, operating expenses include
A) salaries for executives and administrative personnel, raw materials used in manufacturing, rent, insurance, utilities, and advertising expenses.
B) salaries for executives and administrative personnel, cost of merchandise to be sold, rent, insurance, utilities, and advertising expenses.
C) salaries for executives and administrative personnel, rent, freight on items to be sold, insurance, utilities, and advertising expenses.
D) salaries for executives, administrative personnel, and assembly line workers; rent; insurance; utilities; and advertising expenses.
E) salaries for executives and administrative personnel, rent, insurance, utilities, and advertising expenses.

Question

Quizplus · Accepted Answer

Operating expenses typically include the costs associated with the day-to-day activities of a business that are not directly tied to the production of goods or services. This includes salaries for executives and administrative personnel (but not direct labor costs like assembly line workers), rent, insurance, utilities, and advertising expenses. Raw materials, cost of merchandise, and freight on items to be sold are considered part of the cost of goods sold (COGS) rather than operating expenses.

For Most Businesses, Operating Expenses Include