Expense
Definition
A cost incurred by a business to earn revenue, such as rent, salaries, utilities and supplies. Expenses are matched to the period in which they help generate revenue and reduce profit.
Related Terms in Core Accounting
Current vs Non-Current Assets
The split of assets by how soon they are expected to be converted to cash or used. Current assets (cash, receivables, inventory) are expected within a year; non-current assets (property, equipment, long-term investments) are held longer.
Long-Term Liabilities
Obligations due beyond one year, such as long-term loans, bonds, lease liabilities and deferred tax. They finance longer-term assets and are shown separately from current liabilities on the balance sheet.
Contra Asset
An account that reduces the value of a related asset, carrying a credit balance against the asset's debit balance. Accumulated depreciation and the allowance for doubtful accounts are common examples.
Accumulated Depreciation
The total depreciation charged against a fixed asset since it was acquired. It is a contra-asset account; the asset's cost less accumulated depreciation gives its net book value.
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