Expenses - Explained
What are Expenses?
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What are Expenses?
An expense is the cost of an asset or service used to earn revenue. Restated, an expense is just what we use in the business operations.
The point at which we actually expense it is when we have used it.
Example of an Expense
You are using electricity in your business. The cost of that electricity is going to be expensed. Your internet bill - that's an expense because you're using it in order to do something to generate revenue if you're a business.
If you go to the post office and buy a book of stamps, those stamps you bring back to your your work is not necessarily an expense yet. Why? Because, we haven't used them yet. When we start taking them out of the book and putting them on our envelopes and sending them off, at that moment I have used them and can start expensing them.
- What are Financial Statements? – Financial Accounting
- What is the Income Statement? – Financial Accounting
- What is the Statement of Retained Earnings – Financial Accounting
- What is a Balance Sheet? – Financial Accounting
- What is the Statement of Cash Flow? – Financial Accounting