Expense vs Expenditure

Difference Between Expense vs Expenditure

The occurrence of the expenditure during running a business is very normal and natural. Generally, the expenditure is incurred to increase the efficiency of running the business and further to enhance the returns. The terms expense vs expenditure might appear synonyms to a layman, but these terms expenses vs expenditures, when used in the making and preparation of financial statements, will face different meaning altogether. An expense is a type of cost that has been incurred by the entity or the company or by an organization to earn the revenues during a specific time. Expenses will be reported in the income statement which is prepared annually.

Companies or the entities will record the cost of goods and services which are sold in a specific time that is to be expensed. Other expenses which are recorded by the firms or the organizations will include salaries, advertising, utilities, interests, and rent among the others. Expenditure can be referred to the amount that has been incurred by the firm or a company or an organization after it purchases an asset or reduction in its liability among others. Expenditure will cover all the costs that are incurred by the entities or the companies in their purchase of services and goods or payment of recurring kind of expenses. Take an example, the amount that is incurred to offset a liability can be referred to as expenditure and not actually as an expense.

Head To Head Comparison Between Expense vs Expenditure(Infographics)

Below is the top 5 difference between Expense vs Expenditure

Key Differences Between Expense vs Expenditure

let us discuss some of the major Difference Between Expense vs Expenditure

• Expenditure will generate future economic benefits for the company, but the expenses will generate the benefit for the current period only.
• The major difference between Expense vs Expenditure is that the expenditure is a single time investment of money. On the contrary, expenses will occur frequently, and it can be monthly, weekly or even daily basis.
• Expenditure will be shown in the Balance Sheet, under the asset side, and under the Income Statement (as a depreciation), but the expenses are shown only in the Income Statement.
• Expenditure can be capitalized as opposed to the expenses, which are not capitalized but are taken to the Income statement in the same period which reduces the net income of the entity.
• Expenditure is of a longer term. Conversely, Expenses are of the shorter term.
• Expenditure will attempt to improve the earning capacity of the company or the firm or for an entity. On the contrary, expenses will aim at maintaining or say retaining the earning capacity of the firm or the company.
• Expenditure cannot be matched with the capital receipts. And on the flip side expenses, that can be matched with the revenue receipts.

Expense vs Expenditure Comparison Table

Below is the 5 topmost comparison between Expense vs Expenditure

Conclusion – Expense vs Expenditure

Expenses vs Expenditures are the terms that are used in the accounting department to refer to those costs that are incurred by the company or the firm or an organization. Expenditures are the costs that are incurred when buying the assets for the firm or the organization or the company or paying for a significant proportion of the firms or the company’s liabilities. Expenses can be referred to the costs which are incurred by firms or the enterprises so that they can earn the revenue. Some of the costs will include utilities, transportation costs, salaries and depreciation expenses. Other differences between expenses and the expenditure will include implications on the financial statements, number of times incurred, purpose, tenure, and anticipation which have been already discussed. Both Expense vs Expenditure has its own demerits and merits.

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