Expenses are any purchases or money spent in order to generate revenue. Expenses are also known as “the cost of doing business.”
Although some expenses fall into more than one category, there are four main types of expenses.
Fixed expenses are expenses that are consistent, such as rent or salaries. These costs are usually unaffected by company sales or market trends.
Variable expenses, such as utilities and raw materials, vary with company performance and production.
Accrued expenses are those that have been recorded or reported but have not yet been paid.
Operating expenses, such as rent, utilities, payroll, and utilities, are required for a company to conduct business and generate revenue.
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