Accounting Online Program Certification Practice Test 2026 - Free Certification Practice Questions and Study Guide

Operating expenses refer specifically to the costs incurred during the normal operations of a business to generate revenue. This includes a wide array of expenses necessary for running the day-to-day functions of the company, such as salaries and wages, rent, utilities, and supplies. These expenses are crucial for keeping the business operational as they directly relate to the efforts required to produce goods or services.

The other choices do not accurately define operating expenses. For instance, costs related to inventory purchases are classified as cost of goods sold, which is distinct from operating expenses. Expenses arising solely from debt payments pertain to financing activities rather than ongoing operational costs. Similarly, costs associated with selling assets fall under capital expenditures or losses on asset sales, which do not reflect the typical operational expenditures incurred while running the business.

Understanding the nature of operating expenses is vital for analyzing a company's financial performance, as these costs directly affect net income and are integral to assessing operational efficiency.