What is the term for day-to-day running expenses such as rent, wages, and utilities?

What is the term for day-to-day running expenses such as rent, wages, and utilities?

• A. Leasing
• B. Capital expenditure
• C. Overdrafts
• D. Revenue expenditure

Answer: (D)

Classifying costs into revenue versus capital expenditure is being tested. The term for day-to-day running costs such as rent, wages, and utilities is revenue expenditure. These are expenses incurred in the normal course of business and appear as charges in the income statement in the period they occur, reducing profit. They do not create a lasting asset for the business. By contrast, capital expenditure funds long-term assets and is recorded on the balance sheet and depreciated over time. Leases relate to using assets and can be treated as expenses in some cases, while overdrafts are a form of financing, not expenses.

Classifying costs into revenue versus capital expenditure is being tested. The term for day-to-day running costs such as rent, wages, and utilities is revenue expenditure. These are expenses incurred in the normal course of business and appear as charges in the income statement in the period they occur, reducing profit. They do not create a lasting asset for the business. By contrast, capital expenditure funds long-term assets and is recorded on the balance sheet and depreciated over time. Leases relate to using assets and can be treated as expenses in some cases, while overdrafts are a form of financing, not expenses.