Operating Expenses

Operating expenses are costs linked to the supply of goods or services by the company. Similar to operating income, the cost relates to the core business functions and does not involve sudden losses due to fire, natural calamity etc.,

For example, a small business owner sells stationery in an outlet and wishes to check the operating profits. The owner classifies the expenses related to the sale of stationery and ignores other costs like loss due to theft etc., involved to identify the operating profits.

Related Terms

• Opening Balance
• Operating Cost Ratio
• Operating Income