Selling & Administrative Expenses
What are Selling & Administrative Expenses?
Selling & Administrative expenses are part of the operating expenses necessary to run a business.
![sa1](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa1.jpg)
How it Works
A business will earn revenue from sales, fees, and commissions etc.
![sa2](https://seeaccountingnow.online/wp-content/uploads/2021/06/sa2.jpg)
To earn that revenue, the business will have many expenses.
![sa3](https://seeaccountingnow.online/wp-content/uploads/2021/06/sa3.jpg)
These expenses are divided into various categories.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa4.jpg)
For example, one expense category with a trading company is the cost of goods sold (C.O.G.S)
![sa5](https://seeaccountingnow.online/wp-content/uploads/2021/06/sa5.jpg)
The business buys goods, marks them up, and sells them.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa6.jpg)
The profit it makes from this activity is known as gross profit.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa7.jpg)
To generate this income, the business will need to pay for various operating expenses.
![sa8](https://seeaccountingnow.online/wp-content/uploads/2021/06/sa8.jpg)
These are divided into categories, as well.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa9.jpg)
One category contains all selling and distribution costs, such as marketing, advertising, and promotions etc.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa10.jpg)
Another category contains all general and administrative costs such as rent, utilities, payroll, legal fees, and accounting fees.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa11.jpg)
Collectively, these expenses are known as selling & administrative expenses.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/sa12.jpg)