Final answer:
The costs of doing business that result from regular operations are known as expenses. They represent the outflows of cash that a company incurs from its daily activities and are crucial for determining a business's profit.
Step-by-step explanation:
The costs of doing business that are a result of regular business operations are called expenses. These are the money outflows or costs that a company incurs as part of its daily operations, such as rent, salaries, utilities, and materials, among others. A business balances these expenses against its revenues, which are the inflows of cash from the sale of goods or services, to determine its profit. The profit of a business is calculated by subtracting the total expenses from the total revenues (Profit = Total Revenue - Total Expenses). This is a key concept for any business, as effective management of both revenues and expenses is crucial for financial success.
It is important to distinguish expenses from other financial terms such as net income, which is the profit after all expenses have been paid; dividends, which are a portion of a company's earnings distributed to shareholders; and revenue, which, as mentioned, is the income from normal business activities before expenses are deducted.