Lou's total operating expenses for the previous month are ______.

Lou's total operating expenses for the previous month are ______.

• A. $2,110
• B. $3,000
• C. $1,800
• D. $2,500

Answer: (A)

Operating expenses are the costs tied to running the business day-to-day during the month. To find the total, you add up every operating expense account shown on the income statement—rent, salaries and wages, utilities, office supplies, insurance, depreciation, repairs, advertising, and similar items. Do not include cost of goods sold or any financing activities. By summing all those operating costs for the previous month, the total comes to 2,110. This is the best answer because it reflects the full amount actually spent on running the business during that month, capturing all the ongoing expenses. If the total were much higher, it would suggest including items outside normal operating costs or misclassifications; if it were much lower, it would indicate missing expenses.

Operating expenses are the costs tied to running the business day-to-day during the month. To find the total, you add up every operating expense account shown on the income statement—rent, salaries and wages, utilities, office supplies, insurance, depreciation, repairs, advertising, and similar items. Do not include cost of goods sold or any financing activities.

By summing all those operating costs for the previous month, the total comes to 2,110. This is the best answer because it reflects the full amount actually spent on running the business during that month, capturing all the ongoing expenses.

If the total were much higher, it would suggest including items outside normal operating costs or misclassifications; if it were much lower, it would indicate missing expenses.