What are operating expenses?

Operating expenses refer to the costs that a business incurs through its normal operations, which are not directly tied to the production of goods or services. These expenses are essential for maintaining day-to-day business activities and include costs such as rent, utilities, salaries, and office supplies.

Unlike production costs, which are specifically related to the manufacturing of products, operating expenses support the overall functioning of the business. Understanding operating expenses is crucial for managing a company's finances, as they impact profitability and net income calculations. Accurately tracking and managing these expenses helps businesses make informed decisions to improve efficiency and reduce unnecessary costs.

The other options focus on costs related to production, revenue generation, and investment assets, which do not align with the definition of operating expenses.