Gerald wants to find out the net income of his business for the last quarter. He deducts the cost of goods sold from the revenue earned during that period and then deducts the operating expenses from the gross profit. If Gerald decides to subtract the salary of his employees from the operating expenses before deducting the operating expenses from the gross profit, which expenses would he be deducting?

Question

Jean Fitzgerald

Business

18 September, 11:56

Gerald wants to find out the net income of his business for the last quarter. He deducts the cost of goods sold from the revenue earned during that period and then deducts the operating expenses from the gross profit. If Gerald decides to subtract the salary of his employees from the operating expenses before deducting the operating expenses from the gross profit, which expenses would he be deducting?

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Answers (1)

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Soren Walls · Answer 1

Administrative expense is the expense Gerald is deducting.

Explanation:

Administrative expense is a kind of general expense that cannot be tied to any job or task in the firm. Unlike operating expense that is more specific and related to activities that generated the gross profit. An example of administrative expense is salaries of secretaries.