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Difference Between Expense and Expenditure

 

Expense is a type of cost that has been expired and incurred to generate revenues, it is presented in profit and loss statement of a company. For example, electricity charges, payroll and raw material consumed etc.

Expenditure is a payment, made for the purchase of an asset or for reduction of a liability. For example, a payment of Rs500 to the company’s creditor will be considered as the expenditure.

Example

To clarify the difference between an expense and an expenditure, a hypothetical example is being discussed here, where an XY Company incurred the expenditure by purchasing textile related printing machinery for Rs. 2000, the machinery will be intended to print 2500 meter cloth. Assuming the machine’s useful life is 8 years, under the straight-line method of depreciation, the depreciation expense per year will be (Rs. 2,000/8) Rs250.

Difference between an Expense and an Expenditure

Basis of Difference Expense Expenditure
Meaning It is a type of cost that expires/ uses to generate revenues. It is a payment/ disbursement for a purchase of an asset or for settlement of a liability.
Examples Salary paid, building rent and transportation cost of inventory etc. Payment to purchase new land for business or settlement of long-term loans etc.
Tenure Short term Long term

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2 thoughts on “Difference Between Expense and Expenditure

  • March 19, 2019 at 12:35 pm
    Permalink

    In first chart of differences, the points are reversed of expenditure to expenses vice versa

    Reply
    • March 28, 2019 at 8:22 am
      Permalink

      YES.
      That chart was incorrect and hence removed. Thank you for your generous comment.

      Reply

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