Rashid Qazi

Expenses and Losses

Operating Expenses

Operating expenses include expense accounts that are necessary to earn operating revenues.

   Cost of sales (or cost of goods sold)
   Selling, General and Administrative Expenses (SG&A Expenses)

Selling, General and Administrative Expenses include the following accounts.

   Salaries expense
   Sales salaries expense (Salaries expense for sales personnel)
   Insurance expense
   Property tax expense
   Rent expense
   Utilities expense

Nonoperating Expenses and Losses

Nonoperating expenses and losses include expense and loss accounts that are due to the transactions other than the primary operations of the company.

   Interest expense
   Loss on sale of securities
   Loss on sale of buildings
   Loss on sale of machinery
   Loss on sale of equipment

Interest expense account may be classified as operating expenses for banks and other financial corporations, whose primary operations are lending money to earn interest income.

Losses from Discontinued Operations

Losses from discontinued operations are due to the disposal of business segment.

   Loss from operations of discontinued business segment
   Loss on disposal of business segment

Extraordinary Losses

Extraordinary losses include losses that unusual and infrequent.

   Loss on early extinguishment of debt
   Loss from fire
   Loss from flood
   Loss from earthquake

Losses due to Changes in Accounting Method

Cumulative effect of changes in accounting method is reported as either gain or loss in the income statement of the current period.

   Cumulative effect of changes in depreciation method