Operating expense sometimes refers as operating expenditure is the cost of running the day to day operations of a company.
They are not directly related to the sales like the cost of sales expense. For effective expense management, operating expense are reported separately from the cost of sales.
Operating expense is one of major expenses in an organization. It can be categorized as follows for easy expense management:
1. Administrative
a. Personnel cost which covers the staff salary, staff benefits and staff activities.
b. Office premises which covers all expenses relating to the office like rental, upkeep, etc.
c. Stationery and printing which covers all stationeries and printing related expenses.
d. Postage and courier which covers all posting, delivery and printing activities.
e. Telephone and communication which covers all telephones, facsimiles, internet and communication activities.
f. Travelling and entertainment which covers all staff traveling, transportation, fuel, meal and lodging activities.
g. Professional and legal which covers all professional and legal fees such as auditing, corporate services, legal services, etc.
h. Depreciation which covers all fixed assets depreciation.
i. Others which covers whatever expenses that are not listed in any of the above (a) to (h).
2. Selling and distribution
Selling and distribution expenses main relate to expenses incurred in sales promotion, advertising and marketing activities.
To be continued in next post…………………..
