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.
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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