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What is the difference between Expenses and Expenditure?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rohith asked almost 3 years ago

Hi, What is the difference between Expenses and Expenditure?

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4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

Hi, Here's another example to illustrate the difference between an expense and an expenditure. A company makes an expenditure of $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 $100 per day for the next 2,555 days (7 years of service with 365 days each year).

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

Here's another example to illustrate the difference between an expense and an expenditure. A company makes an expenditure of $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 $100 per day for the next 2,555 days (7 years of service with 365 days each year).

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

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. Expenditure: those expenses which are done for the long run and can be en-cashed, though at a loss, when needed, are termed as expenditure. For example, buying a property is an expenditure, which can be converted into cash again when needed, but at a lower price. Expenses: the money incurred to meet out the daily and current financial needs of business, generally for short term, and which can't be converted into cash again is called expense. For example, paying rent for a property is an expense and can't be en-cashed.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

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 $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 $100 per day for the next 2,555 days (7 years of service with 365 days each year). **OR** The main difference between expense and expenditure is that the term 'expense' is used in relation to the outflow made by the profit-oriented business enterprises whereas the term 'expenditure' is used to describe the outflow of resources of a not-for-profit organisation. Secondly from the accounting point of view, when the benefit from a particular cost is likely to flow for more than one accounting period then it is treated as expenditure which will be written off as expense over a suitable period of time. As against this when the benefit of a cost incurred can be derived only for the reporting period, which is usually a one year period, the cost is referred to as expense and charged to the income statement.

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