We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are Cash Operating Costs?

By Osmand Vitez
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

The statement of cash flows tracks all business expenditures that require cash. The first section — operating activities — retains all information on cash operating costs. These costs come from a company’s financial accounting information; in short, there is no real concern as to whether the items are fixed or variable in nature. The statement simply reports the amounts of cash operating costs and whether the company experienced a cash inflow or outflow in this section for a given period. Several types of cash expenditures exist here, such as asset, payables, and other current liabilities.

Assets can be one of the largest groups of cash operation costs, especially for a manufacturing or retail business. Items included here are accounts receivable, inventory, supplies, prepaid assets, and other current assets. These items are commonly used in normal business operations, with the expectation of each individual group lasting less than 12 months. On the statement of cash flows, the outflows represent the actual money spent on these items. Each individual group has its own line and the total amount spent for a given period, typically in one month.

Payables represent items a company purchases on account, with the intent to pay the vendor at a later time. Common inclusion here for cash operating costs include notes, wages, payroll, interest, and taxes payable. The use of cash occurs when a company pays down its previous balance for any of these items during the current month. Similar to the assets described earlier, a single line represents each repayment for reducing these cash operating costs. An increase in a payables account, however, will decrease the cash flow as this indicates money spent by the company.

Other current liabilities are a final section, which details cash operating costs. These items may be unearned revenue or any other current liabilities that a company incurs. Accountants list each item that is a cash operating cost but fails to meet one of the criteria for the previous categories. Special, one-time items may also be here, so accountants can inform stakeholders about significant expenses the company pays for running the business. These can require disclosures if necessary to inform stakeholders about the nature of significant reductions in cash.

The statement of cash flows is for both internal and external stakeholders. Accountants may prepare other reports to detail a company’s cash operating costs. These less formal reports often meet the needs and demands of internal stakeholders. The format and information listed can include any number of figures from the company per standard managerial accounting processes.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.