Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which of the following is classified as operating expenses?

1. Cost of goods sold

2. Sales revenue

3. General costs of operating the business

4. Interest payments on loans

The correct answer is: General costs of operating the business

Operating expenses are the costs that a business incurs as part of its normal operations, excluding the cost of goods sold. These expenses encompass a variety of costs necessary for the day-to-day functioning of the business but do not include direct production costs associated with manufacturing goods. General costs of operating the business, such as rent, utilities, wages, and office supplies, fall under this classification. These expenses support the ongoing activities of the business and are essential for maintaining operations. Cost of goods sold pertains specifically to the expenses directly related to producing products that a company sells and is therefore outside the realm of operating expenses. Sales revenue is the income generated from normal business operations, and while it is crucial for assessing profitability, it does not constitute an expense. Interest payments on loans represent financing costs rather than operational costs.