Difference between Expenses and Expenditure..?

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Follow Query Ask a Query

Pranav Pandey

Pranav Pandey (Querist)
Follow

15 May 2016 what is Difference between Expenses and Expenditure..? plz explain through example.

Sathish M

Sathish M (Expert)
Follow

16 May 2016 An expense is reported on the income statement. An expense is a cost that has expired, was used up, or was necessary in order to earn the revenues during the time period indicated in the heading of the income statement. For example, the cost of the goods that were sold during the period are considered to be expenses along with other expenses such as advertising, salaries, interest, commissions, rent, and so on.

An expenditure is a payment or disbursement. The expenditure may be for the purchase of an asset, a reduction of a liability, a distribution to the owners, or it could be an expense. For instance, an expenditure to eliminate a liability is not an expense, while expenditures for advertising, salaries, etc. will likely be recorded immediately as expenses.

Here's another example to illustrate the difference between an expense and an expenditure. A company makes an expenditure of Rs.255,500 to purchase equipment. The expenditure occurs on a single day and the equipment is placed in service. Assuming the equipment will be used for seven years, under the straight line method of depreciation the cost of the equipment will be reported as depreciation expense of Rs.100 per day for the next 2,555 days (7 years of service with 365 days each year).

Message likes : 2 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now