What are expenses?
What are expenses?
Expenses are the costs associated with operations a business does to generate revenue. Expenses are reported on the income statement in two ways: Cash Basis or Accrual Basis. Cash Basis expenses are recorded when they are paid, while expenses on an Accrual basis are recorded when they are incurred. After deciding how to record expenses, they are then broken up into operating expenses and non-operating expenses. Operating expenses are the expenses derived from a company’s main activities such as their materials, labor, or rent. Non-operating expenses are expenses that are not associated with core operations such as interest charges.
For more information on this topic, check out this article from our friends at Investopedia.