Accountancy Part BAccounting Ratios

Operating Expenses includeA. Rent paidB. Interest paid on loanC. Sell…

Operating Expenses include

A. Rent paid

B. Interest paid on loan

C. Selling and Distribution Expenses

D. Commission Received

E. Salaries Paid

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → A, C and E only

Operating expenses are the expenses of running the business — office and administrative expenses, selling and distribution expenses, employee benefit expenses, depreciation and the like. Non-operating items such as interest paid and incomes are kept out.

A. Rent paid Correct. Rent of the office or premises is an office and administrative expense.

B. Interest paid on loan Incorrect. Interest is a cost of borrowing, a non-operating (finance) expense.

C. Selling and Distribution Expenses Correct. Selling and distribution expenses are operating expenses.

D. Commission Received Incorrect. Commission received is an income, not an expense.

E. Salaries Paid Correct. Salaries are employee benefit expenses, an operating expense.

NCERT (2026-27 edition):
Operating Ratio – “… Operating expenses include office expenses, administrative expenses, selling expenses, distribution expenses, depreciation and employee benefit expenses etc. Cost of operation is determined by excluding non-operating incomes and expenses such as loss on sale of assets, interest paid, dividend received, loss by fire, speculation gain and so on.”