Running a successful business generally requires a solid understanding of the market you're competing in. It also necessitates keeping track of how much money you're making and how much you're spending. Most companies incur operating expenses when carrying out their day-to-day activities; these don't include production costs. Operating expenses are listed on the income statement in two parts -- general and administrative, or G&A, expenses, and selling expenses.
General and Administrative Expenses
G&A expense is an accounting term for the non-selling expenses your company incurs while doing business. These operating costs are related to the business as a whole instead of to a specific department. Some G&A expenses are more administrative, such as administrative and nonproduction salaries, employee benefits, accounting costs, contracting expenses, pension contributions and taxes. Other expenses are more general, including rent, utilities and telephone charges.
By contrast, selling expenses are listed separately on the income statement under operating expenses. Examples of selling expenses include advertising, promotion costs and shipping charges. Salaries for sales personnel and sales commissions are selling expenses, as are the costs of any sales offices the business maintains.