Which term is used to describe ongoing operational expenses?

• A. Payroll
• B. Overheads
• C. Revenue
• D. Procurement

Answer: (B)

The term "overheads" is indeed used to describe ongoing operational expenses that a business incurs regardless of its production levels or sales. Overheads include costs such as rent, utilities, and salaries of employees who do not directly contribute to the production of goods or services. These expenses are essential for the day-to-day functioning of the business but do not directly tie to the creation of products or services being sold.

By distinguishing operational expenses from direct costs, businesses gain better insights into their overall financial health and can make more informed budgeting and financial decisions. Understanding the nature of overheads helps entities identify areas where they might reduce costs or improve efficiency, ultimately influencing profitability.