Administrative Expenses primarily relate to what aspect of a business?

Prepare for the SACE Stage 2 Accounting Exam. Test your knowledge with flashcards and multiple choice questions, with hints and explanations for each question. Get ready to excel!

Administrative expenses are costs that are essential for the overall operation and management of a business, but they are not directly tied to the production of goods or services. These expenses include costs related to the general operation of the business, such as office supplies, salaries of administrative staff, utilities, and any other expenses necessary to maintain the company's administrative functions.

Understanding this, the option that describes the general running of the business and office costs captures the essence of administrative expenses accurately. These costs are crucial for supporting the business's infrastructure, making it possible to operate effectively and ensuring that other areas such as production or marketing can function smoothly.

In contrast, production costs and labor salaries directly relate to the manufacturing process and the workforce involved in creating goods. Marketing and sales promotions pertain specifically to efforts aimed at promoting products, while research and development costs are focused on innovation and product improvement. These areas do not fall under administrative expenses but rather into specific operational functions of a business.

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