ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An expenditure is money spent on something. Expenditure is often used when people are talking about budgets.

Detailed explanation-2: -An expense is the cost of operations that a company incurs to generate revenue. Businesses can write off tax-deductible expenses on their income tax returns, provided that they meet the IRS’ guidelines. Accountants record expenses through one of two accounting methods: cash basis or accrual basis.

Detailed explanation-3: -Cost of goods sold refers to expenses directly related to the production of a product, such as the materials needed to assemble a product and the transportation needed to bring goods from a distributor to a retailer. Both types of expenses are recorded as separate line items on a company’s income statement.

Detailed explanation-4: -Most, but not all, expenses are deductible from a company’s income (revenues) to arrive at its taxable income. The most common tax-deductible expenses include depreciation and amortization, rent, salaries, benefits, and wages, marketing, advertising, and promotion.

Detailed explanation-5: -What is business expenditure? In the broadest definition, business expenditure is the money you spend ‘wholly and exclusively’ for your business. This definition is simple to apply when you incur a cost exclusively for your business, e.g. office supplies.