Understanding General and Administrative [G&A] Expense: A Legal Perspective
Definition & Meaning
General and Administrative (G&A) expense refers to the costs associated with the overall management and administration of a business unit. These expenses include management, financial, and other costs that are not directly tied to specific projects or services. G&A expenses are essential for the general operation of the business but do not include expenses that can be directly attributed to specific cost objectives.
Legal Use & context
G&A expenses are commonly referenced in financial reporting and accounting practices. They are important in various legal contexts, such as corporate law, tax law, and contract law, where accurate financial reporting is crucial. Businesses may need to manage G&A expenses effectively to comply with legal requirements and to prepare for audits. Users can utilize legal templates from US Legal Forms to help in documenting and managing these expenses.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A company incurs costs for office supplies, salaries of administrative staff, and utilities. These costs are classified as G&A expenses because they support the overall business operations rather than specific projects.
Example 2: A hypothetical example would be a consulting firm that allocates costs for its management team's salaries and office rent as G&A expenses, as these costs are necessary for the firm's functioning but not tied to any specific client project.