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General and Administrative Expense: Definition and Meaning
Definition
General and administrative expense, often called G&A expense, includes indirect costs associated with managing and operating a business, such as executive compensation, office expenses, legal costs, and administrative payroll.
Why It Matters
G&A expenses support the overall business rather than one specific project, product, or customer. Monitoring these costs can help management evaluate overhead, budget performance, pricing decisions, scalability, and profitability.
The distinction between direct costs and G&A costs should be applied consistently. In construction, the appropriate allocation of certain overhead costs may be important for job-cost and management-reporting purposes.
Example
Office rent, administrative salaries, accounting software, and executive-management costs may be classified as general and administrative expenses.
Related Terms
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