Expenses are grouped into general and administrative, facilities, personnel, classroom supplies, and food services. Personnel is by far the largest group. At Harbor Oak, wages, payroll taxes, benefits, and substitutes are about 71% of all expenses, which is typical for child care.

Three lines at the bottom work differently:

• Depreciation spreads the cost of long-lasting items, such as playground equipment, over their useful life. No cash leaves the bank when depreciation is recorded.
• Interest expense is the interest portion of a loan payment. The principal portion is not an expense.
• Bad debt expense records tuition the program does not expect to collect.