General And Administrative Expenses SG&A Expense List
Content
General and Administrative (G&A) expenses are the day-to-day costs a business must pay to operate, whether or not it manufactures products or generates revenue. Typical G&A expenses include rent, utilities, insurance payments, and wages and salaries for administrative and management staff other than salespeople. Other costs may include ongoing information technology infrastructure costs, accounting and legal costs, human resources services and the purchase or rental of equipment that’s not used for manufacturing or sales. For example, if you own a small business with only a few employees, your health insurance premiums will likely stay the same each month regardless of how much revenue you generate. However, if your company grows and you have to add more employees to your insurance plan, the premium will increase.
As an accounting intern, you’ve been asked by your supervisor to prepare the company’s monthly income statement. You receive a report containing the breakdown of administrative expenses for the month from another accounting staff member. You want to make your supervisor happy so you check that the monthly income statement administrative charges examples is prepared correctly. From the given report, you want to make sure that these items are correctly categorized as administrative expenses and that they are presented accurately on the face of the income statement. Indirect Costs,Indirect cost is the cost that cannot be directly attributed to the production.
What Are Admin Expenses?
To be classified as an administrative expense, the expense must be a regular business expense that aids the business as a whole rather than a single department, such as sales or production, explains Accounting Coach. Thus, your executive’s salaries would be an example of administrative expenses, while flour used to make cupcakes would not be considered business operating expenses. Administrative expenses are typically ongoing and not tied to a single, limited-purpose business function.
Administrative expenses are a company’s costs to maintain its day-to-day operations. Operating profit is the total earnings from a company’s core business operations, excluding deductions of interest and tax. In order to ensure that a company’s net income is as accurate as possible, it is important to accurately track and report SG&A expenses. This will help ensure that the company’s bottom line is not unduly affected by these costs.
Stay informed on the most pressing issues of our time.
However, many of these expenses are fixed in nature, and so can be fairly difficult to eliminate in the short term. One control technique is zero-base budgeting, where budgets are not automatically rolled forward from the prior year. Instead, all expenses must be justified before they will be allowed into the next year’s budget. These are just a few examples of the types of costs that can be classified as administrative expenses. As can be seen, some of these costs are fixed while others are variable. In general, it is important to keep track of all administrative expenses in order to understand how they impact the organization’s bottom line.
What is an example of selling and administrative costs?
Operating expenses—also known as selling, general and administrative expenses (SG&A)—are the costs of doing business. They include rent and utilities, marketing and advertising, sales and accounting, management and administrative salaries.