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Following are the main types of expenses: Cost of goods sold. Selling and distribution expenses. Operating, general and administrative expenses. Salaries, wages, and benefits. Rent expense. Cost of utilities. Provisions and impairments. Depreciation expense. Amortization expense. Research and development costs. Printing and stationery expense.
This article is aimed at becoming your guide for understanding expenses in accounting. The topics that are covered are: What are Expenses in Accounting? Differentiate Between Expenses and Expenditure; Cost vs. Expenses in Accounting; Types of Expenses in Accounting; How are Expenses Recorded in Accounting? An Example of Expenses and Its Accounting
An Expense is a cost incurred or paid by a company in exchange for the value of something to generate revenue. An expense can be a decrease in economic benefits in the accounting period, such as a cash outflow, a decrease in the value of assets, or a liability arising from a decrease in cash or equity.
Examples of expenses include rent, utilities, wages, salaries, maintenance, depreciation, insurance, and the cost of goods sold. Expenses are usually recurring payments...
List of Expense Accounts. 1. Cost of Sales - also known as Cost of Goods Sold, it represents the value of the items sold to customers before any mark-up. In merchandising companies, cost of sales is normally the purchase price of the goods sold, including incidental costs.
An expense is a type of expenditure that flows through the income statement and is deducted from revenue to arrive at net income. Due to the accrual principle in accounting, expenses are recognized when they are incurred, not necessarily when they are paid for.
Here are a few examples of expenses in accounting: Office Supplies: When a business buys office supplies, it uses cash, an asset. Depreciation: This is a cost that reduces the value of equipment, such as a machine or building, over time as it is used. Prepaid Expenses: For example, if a business pays rent in advance, it’s considered an asset.
This guide covers the ins and outs of business expenses, including common types of expenses, what you might be able to deduct on tax, and why expense management is so important.
For example, a utility expense incurred in April but paid in May will be recorded as an expense in April under the accrual method but recorded as an expense in May under the cash method – as this is when the cash is actually paid.
Expenses are what a company must pay to run its operations and generate revenue. It's the sum of money required to buy something, to put it simply. Making money requires money, according to a saying. Examples of frequent expenses include supplier payments, employee wages, factory leases, and equipment depreciation.