What term describes the costs incurred by a business for operational activities?

The term that describes the costs incurred by a business for operational activities is "expenses." Expenses encompass a wide range of costs that a business must bear in order to carry out its daily operations, such as wages, rent, utilities, and supplies. These expenses are crucial for the functioning of a business and are recorded on the income statement, impacting overall profitability.

In contrast, revenue refers to the income generated from normal business operations, such as sales or services, while liabilities represent the company's obligations to pay debts or fulfill other financial commitments. Equity denotes the ownership interest in the company, which reflects the residual value of assets after liabilities have been deducted. Understanding expenses is essential for managing a business's financial health, as they directly influence net income and cash flow.