The basic principle of an expense is simple enough. They are resources flowing out of a business. However, because expenses are so central to profitability, accountants look at them through lots of different lenses.Four different ways to look at expenses...
Definition of Expense Under the accrual method of accounting, an expense is a cost that is reported on the income statement for the period in which: The cost best matches the related revenues The cost is used up or expires There is uncertainty or difficulty in measuring the future benefit of...
In accounting, an account is a record in the general ledger that is used to sort and store transactions
In double-entry bookkeeping, expenses are recorded as a debit to an income statement account (expense account), and a credit to either an asset account or a liability account –the balance sheet accounts. An expense increases liabilities and decreases assets. Like bananas and fruits, all expense...
At the end of each recording period, a company should properly estimate the dollar amount for each of its accrued expenses, and then record it as an expense account with a corresponding payable/accrued expense liability. The format of the journal entry is shown below: ...
Definition:An account is a record in an accounting system that tracks the financial activities of a specific asset, liability, equity, revenue, or expense. These records increase and decrease as thebusiness eventsoccur throughout the accounting period. Each individual account is stored in the genera...
Expense– This is the amount that is recorded as an offset to revenues or income on a company’s income statement. For example, the same $10 million piece of equipment with a 5-year life has a depreciation expense of $2 million each year. ...
What are expense accounts?Definition of expense accountsExpense accounts are categories within the business’s books that show how much it has spent on its day-to-day running costs.A debit to an expense account means the business has spent more money on a cost (i.e. increases the expense)...
The principal is not an operating expense. Principal repayments are recorded as a finance expense.5. Income taxes – taxes that are applied to business profits are recorded as an expense. GST/HST may not be counted as an expense because the money never belonged to the business....
Open An Account View Disclosure Calculation of an Expense Ratio Most fund managers quickly point out the expense ratio so you don't have to calculate it. However, understanding how the calculation works can help you determine which types of funds tend to have low expense ratios. Robert Johnson...