Operating expenses—also known as selling, general and administrative expenses (SG&A)—are the costs of doing business. They include rent and utilities, marketing and advertising, sales and accounting, management and administrative salaries.
What is the difference between selling and general administrative expenses?
Again, your selling expenses can include both direct and indirect costs of selling a product. On the other hand, your business's general and administrative expenses include day-to-day costs (e.g., rent, utilities, etc.).
Which of the following are not selling general and administrative expenses?
However, to be clear about the concept of selling general and administrative expenses, one must also be aware of the items which are not included in these expenses. For instance, research and development costs, financing costs, interest income, and interest expenses are not a part of SGɪmp;A.
How to calculate selling general and administrative expenses?
SGɪmp;A Expense = Gross Profit – Operating Income (EBIT)\n\n The calculation excludes interest expense since interest is reported as a non-operating expense (i.e. non-core).
What are considered administrative expenses?
Administrative expenses may include salaries of senior management and the costs associated with general services or supplies; for example, legal, accounting, clerical work, and information technology.