Which of the following is an example of an operating expense?

Operating expenses are the costs associated with the normal functioning and maintenance of a property. These expenses are essential for keeping a property in good condition and ensuring it operates efficiently on a day-to-day basis. Regular maintenance of property systems represents an ongoing cost that directly supports the functioning of the property, such as servicing HVAC systems, plumbing, or electrical systems, and is typically included in the annual operating budget.

In contrast, roof replacement represents a significant capital expenditure rather than a regular operating expense because it involves an extensive and costly improvement to the property. Renovations for updating aesthetics typically fall under improvements or capital expenditures as well since they aim to enhance the property’s value rather than maintain its current condition. Replacing old appliances can also be viewed as a capital expenditure if it involves a substantial investment aimed at improving the property long-term rather than a regular expense incurred for day-to-day operations. Therefore, choosing regular maintenance of property systems is the correct identification of an operating expense.