ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An expense in accounting is the money spent, or costs incurred, by a business in their effort to generate revenues. Essentially, accounts expenses represent the cost of doing business; they are the sum of all the activities that hopefully generate a profit.

Detailed explanation-2: -Expenses include wages, salaries, maintenance, rent, and depreciation. Expenses are deducted from revenue to arrive at profits. Businesses are allowed to deduct certain expenses from taxes to help alleviate the tax burden and bulk up profits.

Detailed explanation-3: -Expenses are costs of operating the business, incurred to generate revenues in the period covered by the income statement. Basically, whenever a business uses up its resources to generate revenues during the period, it reports an expense, regardless of when the company pays for the resources.

Detailed explanation-4: -Business expenses are costs incurred in the ordinary course of business. Every business, from the smallest corner store to the largest corporation, tracks these expenses throughout the year for tax purposes. Business expenses are subtracted from revenue to arrive at a company’s taxable net income.

Detailed explanation-5: -The cost of revenue takes into account the cost of goods sold (COGS) or cost of services provided plus any additional costs incurred to generate a sale. Although the cost of revenue factors in many costs associated with sales, it does not take into account the indirect costs, such as salaries paid to managers.