Types of Expenses

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Operating Expenses

Nonoperating Expenses

A business uses operating expenses, also known as regular expenses or OPEX, for its day-to-day activities. Examples of operating expenses include rent and utilities.

Manufacturing businesses usually show operating expenses and often subdivide those expenses into selling, administrative, and general or nonmanufacturing expenses.

Many nonmanufacturing businesses also show operating expenses netted against operating revenue to derive the net operating income.

Basically, an operating expense is money used by a company to turn inventory into profit.

Nonoperating expenses are costs unrelated to the core operation of the business. The most common are interest and finance charges. Other nonoperating expenses include restructuring the company and employee benefits, such as 401K contributions.