What term refers to all costs incurred in operating a business, including the cost of materials and goods?

The correct term for all costs incurred in operating a business, which encompasses both the cost of materials and goods, is "expenses." Expenses are the outflows of funds or other resources that a business incurs while operating. This includes not only the costs of raw materials and inventory but also salaries, rent, utilities, and any other operational costs necessary for running the business.

Understanding expenses is crucial for financial management, as they directly affect the profit margins of the business. By monitoring and managing expenses, a business can enhance its profitability and overall financial health.

The other terms provided do not define what encompasses operational costs. Revenue refers to the income generated from sales of goods or services, profits represent the financial gain after subtracting expenses from revenue, and investments relate to the allocation of resources with the expectation of generating income or profit in the future. Thus, these terms highlight different aspects of financial performance but do not describe the total operational costs of a business.