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General And Administrative Expense (G&A)

General And Administrative Expense (G&A)

What is a 'General And Administrative Expense - G&A'

A general and administrative expense (G&A) refers to expenditures related to the day-to-day operations of a business. General and administrative expenses pertain to operation expenses rather that to expenses that can be directly related to the production of any goods or services, including rent, utilities, insurance and managerial salaries. In the company's income statement, these expenses generally appear under operating expenses.

Explaining 'General And Administrative Expense - G&A'

General and administrative expenses occur independently of sales activity. Even in the absence of any sales, general and administrative expenses occur. These types of expenses are listed below cost of goods sold on a consolidated income statement. Many general and administrative expenses are fixed dollar amounts and not easily attributable to cost-reduction strategies. While general and administrative expenses allow for a business to operate, the operating expenses are those necessary for the production and sale of the specific goods or services being offered.

Examples of General and Administrative Expenses

Examples of general and administrative expenses include building rent, consultant fees, depreciation on office equipment, insurance, supplies, subscriptions and utilities. Salary and benefits attributable to corporate management as well as any legal staff are also classified as general and administrative expenses. Expenditures for research and development are usually aggregated in a different expense category.

Statement of Income

The top aggregated line item on a statement of income is always net revenues. The total cost of goods sold is deducted from this figure to determine the gross margin. The general and administrative expenses are always deducted from the gross margin in a consolidated income statement to arrive at net income. Not all general and administrative expenses have to be grouped under one category; fees and interest are often classified as their own line item when deducting expenses to arrive at net income.

Cost Reduction Strategies

Because they do not directly tie to the production or sale of a product or service, management has strong incentive to minimize these types of expenses. Companies with centralized management typically experience higher general and administrative costs when compared with companies with decentralized management structures. The sales to administrative expense ratio compares the revenue generated to the amount of expenses needed to support the company’s operations.

Tax Implications

Most general and administrative expenses incurred can be deducted from the entity’s tax return so long as the expenses are reasonable, ordinary and necessary. Items as salaries or rent for the current period must be deducted in the year they are used. Expenses of a long-term nature that benefit multiple periods are deducted over the relevant period of time.


General And Administrative Expense (g&a) FAQ

What are examples of general and administrative expenses?

General and administrative expenses items include: Rent. Utilities. Insurance. Executives wages and benefits. The depreciation on office fixtures and equipment. Legal counsel and accounting staff salaries. Office supplies.

What are administrative expenses?

Administrative expenses are expenses incurred by an organization and has no ties with a specific function such as manufacturing, production, or sales. Administrative expenses are the wages of senior executives and costs of general services, for example, accounting and information technology.

What is the difference between overhead and G&A expenses?

General and Administrative, or G&A, expenses benefit the whole organization. Direct Labor causes Overhead. Expenses benefiting the company as a whole may be divided into more than one pool/rate by more than one base. One pool for all such expenses simplifies explanation.

What is included in general and administrative expenses?

General and administrative (G&A) expenses are incurred in the daily operations of company and may not be related to a specific function or department within the company. G&A expenses include rent, utilities, insurance, legal fees, and certain salaries.

Is rent an administrative expense?

Rent is classified as an administrative expense.

What is an acceptable G&A percentage?

They include salaries of the company's front office staff and the likes. As a percentage of labor hours, G&A costs tend to fall in the 10–25 percent range of the direct factory labor rate. These costs are assigned to all designed or manufactured products.

What are administrative expenses on income statement?

Administrative expenses are expenses not related to a specific function within the company like manufacturing, production, or sales. G&A expenses include rent, utilities, insurance, legal fees, and certain salaries.

Further Reading

Managerial style and firm valueManagerial style and firm value
onlinelibrary.wiley.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Taking the complexity out of managing the expense line—general and administrative (G&A) cost-management strategies for LNG and CSG projectsTaking the complexity out of managing the expense line—general and administrative (G&A) cost-management strategies for LNG and CSG projects
www.publish.csiro.au [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Organization Cost, Sales, General and Administrative Expenses and Management CostOrganization Cost, Sales, General and Administrative Expenses and Management Cost
ieeexplore.ieee.org [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Economic evaluation of enhanced oil recoveryEconomic evaluation of enhanced oil recovery
ogst.ifpenergiesnouvelles.fr [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Focus, transparency and value: the REIT evidenceFocus, transparency and value: the REIT evidence
onlinelibrary.wiley.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

An examination of the economic consequences associated with government contractors' choice of cost allocation basesAn examination of the economic consequences associated with government contractors' choice of cost allocation bases
search.proquest.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

The economic versus accounting impacts of R&D on US market-to-book ratiosThe economic versus accounting impacts of R&D on US market-to-book ratios
papers.ssrn.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Real Efficiency Gains Seen in'05Real Efficiency Gains Seen in'05
www.questia.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

Are costs really sticky and biased? Evidence from manufacturing listed companies in ChinaAre costs really sticky and biased? Evidence from manufacturing listed companies in China
www.tandfonline.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …

2013 Financial Report2013 Financial Report
journals.lww.com [PDF]
… C„ is simply the cash flow from properties, Yr minus any interest expense, /„ and corporate … For very small firms, an increase Table 3 ■ General and administrative expenses … for the largest firm in the sample, estimated average and marginal administrative costs are only 0.6 …


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Section 508

WCAG 2.0

Section 508