Question

Which of the following is NOT an operating expense?

1) Rent
2) Cost of goods sold
3) Depreciation
4) Utilities
5) Wages

Answer 1

Cost of goods sold (COGS)(2) is not considered an operating expense. Operating expenses are the expenditures that a business incurs through its normal business operations, unlike COGS, which relates to direct costs of production.

Step-by-step explanation:

The correct answer to which of the following is NOT an operating expense is cost of goods sold(2). Operating expenses consist of expenditures that a business incurs as a result of performing its normal business operations. This includes items such as rent, depreciation, utilities, and wages, which are all necessary for the day-to-day operations of a business. However, cost of goods sold (COGS) represents the direct costs attributable to the production of the goods sold by a company and is not categorized as an operating expense but as part of the cost of sales in the income statement.