Certified Financial Management Specialist Practice Exam

Operational expenses refer to which of the following?

1. Costs associated with asset purchases

2. Costs incurred during normal business operations

3. Revenue generated from investments

4. Income from sales and services

The correct answer is: Costs incurred during normal business operations

Operational expenses are costs that a business incurs through its normal operational activities. This includes expenses necessary to maintain the daily functioning of the company, such as salaries, utilities, rent, and office supplies. These are ongoing costs that are vital for the business to operate efficiently and effectively. Understanding operational expenses is crucial as they directly impact the company's profitability and financial health. The other options refer to different financial aspects: asset purchases are typically considered capital expenditures, which are investments in assets intended for long-term use; revenue from investments pertains to income generated by assets held for investment purposes rather than operational activities; and income from sales and services represents revenue, which is distinct from the costs associated with running the business. Therefore, the clarity that operational expenses encompass costs incurred during routine operations aligns perfectly with the definition of operational expenses.