What are business expenses?

Simply put, expenses are the cost of doing business. Anything you spend money on to operate your business and generate revenue counts as a business expense. Common business expenses include rent, staff wages, equipment, vehicles, payments to suppliers, and insurance. The type of business you run impacts the type of expenses you’ll incur.

What is an expense in accounting?

An expense is a type of expenditure that flows through the income statement and is deducted from revenue to arrive at net income. Due to the accrual principle in accounting, expenses are recognized when they are incurred, not necessarily when they are paid for. As the diagram above illustrates, there are several types of expenses.

What is an example of an expense?

The dollar amount of the resources used up by the firm during a particular period of time in earning revenues. For example, if a company chooses to spend $1000 on marketing or advertising campaigns for their products and services, then they have spent an expense of $1000. An expense is broken up into two main categories: operational and capital.