What types of costs are considered operating expenses?

Operating expenses are the costs necessary to maintain the day-to-day functioning of a business or property. These expenses are critical because they directly affect the operational efficiency and profitability. When examining the category of operating expenses, the costs associated with property taxes and insurance are indeed typical examples. Property taxes are levied by local governments and must be paid to maintain legal ownership of the property. Insurance, on the other hand, protects against potential losses and is essential for safeguarding the property and investments.

These expenses do not include costs related to debt repayment, which is a financing cost rather than an operational cost, nor do they include any personal and unrelated business expenses. Operating expenses focus on the necessary costs to run the business effectively instead of broader or unrelated financial burdens. Therefore, understanding that costs like property taxes and insurance are vital to keeping the property operational clarifies why this is the correct choice.