Operating expenses on an income statement refer to the costs of running a business. These include all costs associated with running the day-to-day operations of a company such as labor, materials, rent, utilities, marketing and general administration. In essence, these expenses are incurred in the ordinary course of business and do not relate to long-term investments or acquisitions. Thus, operating expenses are distinct from capital expenditures and any non-operating items such as interest expenses, foreign exchange losses and extraordinary items which appear separately on the income statement.