Difference between revisions of "Expense"
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| − | An '''expense''', in business | + | An '''expense''', in business accounting, is the spending of money (current or future) for reasons other than the purchase of an [[asset]] or the repayment of a [[liability]]. (In government accounting, the term "[[expenditure]]" is used because it involves the actual payment of cash.) |
As an example, buying toner for the office printer is an expense. However, the printer itself is generally not an expense, but an asset purchase. (In some larger companies, purchases of assets under a certain amount are treated as expenses due to the small amount involved.) | As an example, buying toner for the office printer is an expense. However, the printer itself is generally not an expense, but an asset purchase. (In some larger companies, purchases of assets under a certain amount are treated as expenses due to the small amount involved.) | ||
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| + | On a financial statement, a "prepaid expense" is an amount which is for an expense covering a period of time in the future. A common example is an insurance premium, which often covers portions of more than one fiscal year. | ||
[[Category:Accounting Terms]] | [[Category:Accounting Terms]] | ||
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Latest revision as of 14:06, September 19, 2024
An expense, in business accounting, is the spending of money (current or future) for reasons other than the purchase of an asset or the repayment of a liability. (In government accounting, the term "expenditure" is used because it involves the actual payment of cash.)
As an example, buying toner for the office printer is an expense. However, the printer itself is generally not an expense, but an asset purchase. (In some larger companies, purchases of assets under a certain amount are treated as expenses due to the small amount involved.)
On a financial statement, a "prepaid expense" is an amount which is for an expense covering a period of time in the future. A common example is an insurance premium, which often covers portions of more than one fiscal year.