Which term refers to expenses incurred on a regular basis by a business?

Which term refers to expenses incurred on a regular basis by a business?

• A. Capital expenditure
• B. Revenue expenditure
• C. Fixed costs
• D. Direct costs

Answer: (B)

The term that refers to expenses incurred on a regular basis by a business is revenue expenditure. This type of expenditure includes costs that are necessary for the day-to-day functioning of a business, such as rent, utilities, salaries, and raw materials. These expenses are typically short-term and are fully consumed within the accounting period in which they are incurred. Revenue expenditure is crucial for operations because it impacts the income statement as these costs are deducted from revenue to determine profit. Businesses need to manage their revenue expenditures effectively to ensure that they remain solvent and capable of supporting ongoing activities. In contrast, capital expenditure refers to expenses incurred for acquiring or upgrading physical assets like property, equipment, or facilities, which are used over a longer time frame. Fixed costs are a subset of revenue expenditures that remain constant regardless of the level of production or sales, while direct costs are specifically attributable to the production of goods or services.

The term that refers to expenses incurred on a regular basis by a business is revenue expenditure. This type of expenditure includes costs that are necessary for the day-to-day functioning of a business, such as rent, utilities, salaries, and raw materials. These expenses are typically short-term and are fully consumed within the accounting period in which they are incurred.

Revenue expenditure is crucial for operations because it impacts the income statement as these costs are deducted from revenue to determine profit. Businesses need to manage their revenue expenditures effectively to ensure that they remain solvent and capable of supporting ongoing activities.

In contrast, capital expenditure refers to expenses incurred for acquiring or upgrading physical assets like property, equipment, or facilities, which are used over a longer time frame. Fixed costs are a subset of revenue expenditures that remain constant regardless of the level of production or sales, while direct costs are specifically attributable to the production of goods or services.