DECA+ Business Management and Administration Practice Exam

What are considered operating expenses?

1. Costs associated with purchasing inventory

2. Expenses incurred in running the business

3. Legal fees for trademark protections

4. Costs related to employee benefits

The correct answer is: Expenses incurred in running the business

Operating expenses are the ongoing costs incurred during the normal functioning of a business. This includes expenses related to everyday operations that are necessary for the organization to produce goods or services and maintain its activities. The definition encompasses various costs, such as rent, utilities, wages for employees not directly tied to production, and most general office supplies. Selecting "expenses incurred in running the business" aligns perfectly with this definition, as it emphasizes the broad category of expenses that support the business's overall operations. While other choices represent valid costs, they do not fit the general definition of operating expenses as completely. For instance, costs associated with purchasing inventory pertain more specifically to the cost of goods sold rather than operational expenses. Legal fees may also be categorized differently, often considered part of administrative or professional expenses rather than daily operations. Finally, while costs related to employee benefits do contribute to operating expenses, they are only a subset of the broader expenses incurred in running the business. Therefore, this choice captures the essence of operating expenses more comprehensively.