Which of the following is NOT considered an operating expense?
a) Rent for office space
b) Employee salaries
c) Cost of goods sold
d) Utility bills
Answer: c) Cost of goods sold
Operating expenses are also known as:
a) Fixed costs
b) Direct costs
c) Variable costs
d) Overhead costs
Answer: d) Overhead costs
Which of the following is an example of a non-operating expense?
a) Advertising expenses
b) Depreciation expenses
c) Interest expenses
d) Payroll expenses
Answer: c) Interest expenses
True or False: Operating expenses include costs directly related to producing and delivering goods or services.
Answer: False
Which of the following is an example of a typical operating expense for a retail business?
a) Inventory purchases
b) Insurance premiums
c) Research and development costs
d) Legal fees
Answer: b) Insurance premiums
Operating expenses are subtracted from which of the following to calculate a company’s operating income?
a) Gross profit
b) Net income
c) Cost of goods sold
d) Revenue
Answer: a) Gross profit
Which of the following is NOT an operating expense for a manufacturing company?
a) Raw material costs
b) Machinery maintenance costs
c) Advertising expenses
d) Sales commissions
Answer: c) Advertising expenses
Which financial statement includes a breakdown of operating expenses?
a) Income statement
b) Balance sheet
c) Statement of cash flows
d) Statement of retained earnings
Answer: a) Income statement
True or False: Operating expenses are typically recurring and expected to be incurred on an ongoing basis.
Answer: True
Which of the following is an example of an operating expense for a software company?
a) Research and development costs
b) Travel expenses
c) Patent filing fees
d) Property taxes
Answer: a) Research and development costs
Which of the following is an example of a utility expense that would be classified as an operating expense?
a) Rent for office space
b) Employee salaries
c) Electricity bill
d) Advertising expenses
Answer: c) Electricity bill
True or False: Operating expenses include costs associated with the day-to-day operations of a business.
Answer: True
Which of the following is an example of an administrative expense, typically considered an operating expense?
a) Research and development costs
b) Office supplies
c) Interest on a loan
d) Repairs and maintenance
Answer: b) Office supplies
Which financial ratio is commonly used to assess a company’s efficiency in managing its operating expenses?
a) Current ratio
b) Return on investment (ROI)
c) Gross profit margin
d) Debt-to-equity ratio
Answer: c) Gross profit margin
Which of the following is an example of a selling expense, categorized as an operating expense?
a) Property taxes
b) Depreciation expense
c) Advertising costs
d) Legal fees
Answer: c) Advertising costs
True or False: Operating expenses are deducted from revenue to determine a company’s net income.
Answer: True
Which of the following is an example of a variable operating expense?
a) Employee salaries
b) Rent for office space
c) Cost of raw materials
d) Property insurance
Answer: c) Cost of raw materials
Which of the following is an example of an indirect operating expense?
a) Sales commissions
b) Research and development costs
c) Employee benefits
d) Packaging materials
Answer: d) Packaging materials
True or False: Operating expenses are typically disclosed as separate line items in a company’s financial statements.
Answer: True
Which of the following is an example of a discretionary operating expense?
a) Rent for a retail store
b) Employee wages
c) Donations to charitable organizations
d) Cost of goods sold
Answer: c) Donations to charitable organizations
Which of the following is an example of an operating expense for a transportation company?
a) Maintenance and repairs of vehicles
b) Investment in stocks and bonds
c) Legal fees for a lawsuit
d) Rent for office space
Answer: a) Maintenance and repairs of vehicles
True or False: Operating expenses can be directly attributed to the production of goods or services.
Answer: True
Which of the following is an example of a research and development expense that would be classified as an operating expense?
a) Salary of a scientist working on a new product
b) Interest paid on a loan for research equipment
c) Utilities for the research laboratory
d) Lease payment for office equipment
Answer: c) Utilities for the research laboratory
Which financial statement provides a summary of a company’s operating expenses over a specific period?
a) Statement of cash flows
b) Balance sheet
c) Income statement
d) Statement of retained earnings
Answer: c) Income statement
Which of the following is an example of an operating expense for a restaurant?
a) Cost of food ingredients
b) Loan interest payments
c) Office supplies
d) Building renovations
Answer: a) Cost of food ingredients
True or False: Operating expenses are generally tax-deductible for businesses.
Answer: True
Which of the following is an example of an operating expense for a healthcare facility?
a) Patient medical supplies
b) Advertising expenses
c) Investment in stocks
d) Employee retirement benefits
Answer: a) Patient medical supplies
What is the purpose of analyzing operating expenses as a percentage of revenue?
a) To assess profitability
b) To evaluate liquidity
c) To measure solvency
d) To calculate return on investment
Answer: a) To assess profitability
Which of the following is an example of a period cost, considered an operating expense?
a) Direct labor costs
b) Property taxes on manufacturing facilities
c) Cost of goods sold
d) Administrative salaries
Answer: b) Property taxes on manufacturing facilities
True or False: Operating expenses include both fixed and variable costs.
Answer: True