the cost best matches the associated revenues, or 3. Some of the likely expenses for an airline may include: the cost of tickets sold, commissions earned by travel agents, airport fees, rent for checking-in space at airports, the cost of utilities at its offices, money it spent on advertising, wages and salaries, the purchase of aircraft, the maintenance of its airplanes, etc.Īccounting Coach says that accountants and bookkeepers, under the accrual method of accounting, report expenses on the income statement for the accounting period when: 1. Ordinary means it is common or accepted in that sector, while necessary means it was needed or helpful in pursuit of making sales, i.e. A high-expense good or service is ‘expensive’, while one that costs little is ‘inexpensive’.Īccording to most tax authorities, a business expense has to be both necessary and ordinary. For a student tuition is an expense, for a tenant it is the rent.Įxpenses are costs that are remitted or paid, typically in exchange for something of value. In everyday English, the term refers to an outflow of money from a party to pay for a good or service, or for a category of cost. It is the amount of money that any entity has to spend on something. An Expense or Expenditure is a cost during a specific accounting period that occurs as a business’ or organization’s operating activities.
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