What are general and administrative expenses?
General and administrative expenses are commonly referred to as “G&A expense”. G&A expenses are part of operating expenses and include all costs that are not cost of goods sold or selling expenses. G&A expense is basically the “catch all bucket” for all other costs that are incurred in the normal course of business.
G&A expense is typically fixed, meaning that G&A expense does not fluctuate with the company’s revenues. G&A is typically incurred regardless of whether or not the company is selling product or services to its customers. Types of G&A expense include rent, utilities, executive team compensation, back office employee compensation, insurance, computer and supplies, and depreciation on back-office buildings and equipment.
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What is an operating expense?
An operating expense can be phrased as an expense that is incurred in the normal course of business that are not related to the product or service the business is selling. Basically, these are costs that are necessary to run the business and support the sale of the product or service the business is providing […]
What are selling expenses?
Any cost or expenses that is incurred to sell or promote a product or service is considered a “selling expense”. Selling expenses are a key category of operating expenses, which means they are subtracted from gross profit to calculate operating profit. Selling expenses are typically categorized as period expenses, which means that they are recognized […]
What are cost of goods sold?
Cost of goods sold represents the total amount of expenses that is incurred to produce the product or service that the company sells to its customers. There is a level of subjectivity involved when determining whether a cost is a cost of good sold or an operating expense. Cost of goods sold generally includes direct […]