Expense

Expense can be explained as costs or expenditure maintained by a company for a certain accounting period to earn certain amount of revenues. Mostly expenses are incurred through the operating activities of a company. In terms of accounting expense is exactly opposite of that of revenue. Expenses are actually the costs that a business or a company must have to pay to earn revenue. In order to maximize the revenues a company must cut short of its expenses. Examples of expense include wages and salaries of the staff, bills and rents, costs of certain utilities such as electricity, gasoline etc, commissions paid to the marketing and sales staff, cost of marketing and advertising and costs of the sold goods. In general terms expense may be explained as the cash outflow from one business to the other business, company or a person.

Like revenues expenses are also categorized in two categories and those are operating expenses and non operating expenses. Operating expenses are the expenses occurred due to major business activities such as costs of goods sold and the total administrative expense of the company where as non-operating expense are those that are not directly related to the major business activities such as interest expense

Expense can be further explained as a use of an asset or incurring of a liability. While bookkeeping in accounting expenses are debited in an expense account and are credited in an asset account or a liability account. In some of accounting terms expenses are also termed as “purchases” as this title helps in lessening its peculiarity.