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Expenses - Explained

What are Expenses?

Written by Jason Gordon

Updated at April 7th, 2022

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Table of Contents

What are Expenses?Example of an Expense

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. 


Back to: Accounting & Taxation

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.

Related Topics

  • What are Financial Statements? – Financial Accounting
    • Consolidated Financial Statements
  • What is the Income Statement? – Financial Accounting
    • What are Revenues? – Financial Accounting
    • What are Expenses? – Financial Accounting
  • What is the Statement of Retained Earnings – Financial Accounting
  • What is a Balance Sheet? – Financial Accounting
    • Accounting Equation Definition
    • What are Assets? – Financial Accounting
    • What are Liabilities? – Financial Accounting
    • What is Equity? – Financial Accounting
  • What is the Statement of Cash Flow? – Financial Accounting
  • Analysis and Creating Financial Statement 
expenses

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