Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What are operating expenses in a business context?

1. Costs associated with marketing and advertising

2. Costs a business must incur to remain operational

3. Revenue generated from business activities

4. Expenses related to employee salaries only

The correct answer is: Costs a business must incur to remain operational

Operating expenses refer to the costs that a business must incur to maintain its day-to-day operations. These expenses are essential for running the business and ensuring it can produce its goods or services efficiently. They typically include rent, utilities, salaries (not limited to just employee salaries), office supplies, and other necessary expenditures that contribute to the ongoing functioning of the business. The focus on operating expenses encompasses all necessary expenditures that a company needs to manage on a regular basis, which is why this choice is correct. It captures the broader definition that includes a variety of costs beyond just marketing, revenue, or solely employee salaries. Understanding operating expenses is vital, as they not only impact profitability but also play a role in financial planning and analysis within a business.