Costs in Business
What do we mean by business costs?
| " Operating costs are matched against revenue - capital costs are not ..." |
Business costs can be classified under 2 general groups:
- Operating Costs: These costs are incurred by the business for its day to day operations, for example, cost of materials, wages, power, telephones, salaries, advertising, interest, rent etc
- Capital Costs: These are costs that have an effect on the business for a long period of time. For example - plant and machinery, equipment, vehicles, etc.
Difference Between the 2 Costs
The main difference between the two are that operating costs are costs incurred within a period of time and it is an expense that is matched against income earned in that same perio...
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