Which term describes expenses incurred in paying for daily activities of a business?

Which term describes expenses incurred in paying for daily activities of a business?

• A. Fixed Costs
• B. Operating Expenses
• C. Variable Costs
• D. Direct Costs

Answer: (B)

Operating expenses are the costs that a business incurs during its regular activities, such as rent, utilities, salaries, and materials needed for production. These expenses are essential for the ongoing operations of the business and are typically recurring in nature, unlike fixed costs which remain constant regardless of the level of production or sales. Operating expenses are also distinct from variable costs, which fluctuate based on production levels, and direct costs, which can be directly attributed to the production of specific goods or services. Understanding operating expenses is vital for managing a business effectively, as they directly impact the company's profitability and financial performance.

Operating expenses are the costs that a business incurs during its regular activities, such as rent, utilities, salaries, and materials needed for production. These expenses are essential for the ongoing operations of the business and are typically recurring in nature, unlike fixed costs which remain constant regardless of the level of production or sales. Operating expenses are also distinct from variable costs, which fluctuate based on production levels, and direct costs, which can be directly attributed to the production of specific goods or services. Understanding operating expenses is vital for managing a business effectively, as they directly impact the company's profitability and financial performance.