What is an expense?

In accounting terms, an expense is a cost that a company incurs in order to generate revenue or to maintain its operations, such as salaries, rent, utilities, and supplies.

In simple terms, expenses are the operational costs of the business. It is the money going out of business in return for goods or services. This cost is incurred to generate income for the business. Operating expenses, non-operating expenses, fixed expenses, and variable expenses are types of expenses.

When expenses are incurred, the expense account is debited and reflected in the profit and loss account, and the correspondence account or liability is credited.

Operating expenses are related to the day-to-day operations of the business, for example, the purchase of goods, office supplies, administrative expenses, salaries, etc., while non-operating expenses include interest, lawsuit expenses, restructuring expenses, etc. They are not related to day-to-day operations.

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