Expenses
Also called: costs
The costs a business incurs to earn its revenue, such as materials, salaries, rent, interest and tax.
Expenses are subtracted from revenue to calculate profit. They include the direct cost of goods sold, operating expenses such as rent and salaries, interest on borrowings and tax.
Some costs are spread over time rather than recorded all at once. For example, the cost of a machine is spread over its useful life as depreciation.
Learn more in these lessons
- Revenue, expenses and profitWhat is the difference between revenue and profit?
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