Question

What are Operating Expenses?

Answer 1

Operating expenses are the costs that a firm incurs as part of its routine business operations to produce revenue. These expenses are required for the day-to-day operation of the firm but have no direct connection to the creation of goods or services, like administration expenses, selling and distribution expenses, bad debts, interest on short-term loans, depreciation, etc. Operating expenses are deducted from gross profit to calculate operating profit.