Selling & Administrative Expenses
What are Selling & Administrative Expenses?
Selling & Administrative expenses are part of the operating expenses necessary to run a business.
How it Works
A business will earn revenue from sales, fees, and commissions etc.
To earn that revenue, the business will have many expenses.
These expenses are divided into various categories.
For example, one expense category with a trading company is the cost of goods sold (C.O.G.S)
The business buys goods, marks them up, and sells them.
The profit it makes from this activity is known as gross profit.
To generate this income, the business will need to pay for various operating expenses.
These are divided into categories, as well.
One category contains all selling and distribution costs, such as marketing, advertising, and promotions etc.
Another category contains all general and administrative costs such as rent, utilities, payroll, legal fees, and accounting fees.
Collectively, these expenses are known as selling & administrative expenses.