What is an SG and A expense?

Operating expenses—also called selling, general and administrative expenses (SG&A)—are the costs of running a business. They include rent and utility costs, marketing expenditures, computer equipment and employee benefits.

What is SG&A?

What Is Selling, General, and Administrative Expense (SG&A)? The category of selling, general, and administrative expense (SG&A) in a company’s income statement includes all general and administrative expenses (G&A) as well as the direct and indirect selling expenses of the business.

What is a good SG&A percentage?

What’s a good SG&A sales ratio? Generally speaking, the lower the better. But average SG&A sales ratios vary wildly based on industry. For example, manufacturers range anywhere from 10\% to 25\% of sales, while in health care it isn’t unusual for SG&A costs to approach 50\% of sales.

What is the difference between SG&A and operating expenses?

They both consist of costs that are not included in the COGS. The only real difference between operating expenses and SG&A is how you record them on the income statement. Some businesses prefer to list SG&A as a subcategory of operating expenses on the income statement.

Is bad debt expense selling or administrative?

Bad debt expenses are generally classified as a sales and general administrative expense and are found on the income statement. Recognizing bad debts leads to an offsetting reduction to accounts receivable on the balance sheet—though businesses retain the right to collect funds should the circumstances change.

Is bad debt expense an operating expense?

The current period expense pertaining to accounts receivable (and its contra account) is recorded in the account Bad Debts Expense which is reported on the income statement as part of the operating expenses.

What is the difference between selling and administrative expenses?

General and administrative expenses are all the expenses not associated with selling and not associated with making the product. These expenses include the overhead to run the main office, marketing, executive and support staff, and any distribution costs.

Why is SG&A negative?

As you can see, a negative spread means your SG&A costs are growing faster than your revenue. Operating profit is simply what’s left over after you deduct cost of goods (or services sold) and SG&A costs from revenue.

How do you calculate selling general and administrative expenses?

It is calculated by dividing the reported operating profit by the sales for that period. Alternatively, start with reported revenue and subtract cost of goods sold, SG&A and other overhead costs. Divide the operating income total by reported revenue and multiply it by 100 to express as a percentage.

Are selling expenses operating expenses?

Selling expenses are the costs associated with distributing, marketing and selling a product or service. They are one of three kinds of expense that make up a company’s operating expenses.

Is salaries expense an administrative expense?

Wages and benefits to certain employees, such as accounting and IT staff, are considered administrative expenses. All executive compensation and benefits are considered an administrative expense.

Where does bad debt expense go on P&L?

Presentation of Bad Debt Expense The bad debt expense appears in a line item in the income statement, within the operating expenses section in the lower half of the statement.