Certified Pennsylvania Evaluator Practice Exam

What is included in operating expenses?

1. Costs for real estate taxes

2. Utilities and salaries

3. Insurance premiums

4. Monthly fixed charges

The correct answer is: Utilities and salaries

Operating expenses encompass the costs incurred to maintain and manage a property or facility, as they are essential for the day-to-day functioning and upkeep. In the context of the options provided, the choice of utilities and salaries accurately fits the definition of operating expenses because these are ongoing costs necessary for the operation of a business or property. Utilities are essential for providing basic services like electricity, water, and gas, and therefore directly contribute to the functioning of the property. Salaries are also a significant part of operating expenses as they represent the compensation paid to employees responsible for managing, maintaining, or servicing the property. While real estate taxes, insurance premiums, and monthly fixed charges are certainly relevant financial aspects affecting a property, they do not fall within the typical classification of operating expenses. Real estate taxes are typically considered a form of property-related liability, insurance premiums are a protective measure rather than an operational requirement, and monthly fixed charges may not always be directly tied to the day-to-day expenses of running a property.