Expenses and Their Significance to Management

Operating Expenses: Also known as regular expenses, or OPEX, for its day-to-day activities.

Nonoperating Expenses: Costs unrelated to the core operation of the business.

Cost of goods sold: Deducted costs directly related to the sale from the revenue; also known as COGS.

A company incurs expenses as a cost of doing business. The types of expenses include operating, nonoperating, and cost of goods sold. Examples can include taxes, payroll, and inventory costs. Companies monitor these expenses on the income statement.