Expenses

Meaning with Some Examples An indirect expense is an expense incurred by a firm that is not directly related to the core business operations. To ensure the success of a business indirect expenses must be incurred, but they cannot be directly linked to the costs of its core product/service offering. In this article we try […]

Unexpired Cost Every asset in a company is expected to fetch at least 100% returns on its cost, however, the returns obtained may not be in a single accounting period and may spread to multiple future accounting years. This is why unexpired cost exists in a business. At the time of preparing financial statements, an asset may have […]

Capitalized Expenditure or Capitalized Expense Capitalized expenditure is nothing but a revenue expenditure which is essential to acquire and function a new asset or improve an existing asset’s earning capacity. All such expenses are treated as if it were for the purchase of the fixed asset itself and are termed as a capitalized expenditure. All […]

Treatment of Carriage Outwards and Carriage Inwards in Trial Balance The trial balance is a statement of Dr. & Cr. balances which are extracted from ledger accounts after balancing them. It is prepared to prove that the total of accounts with a debit balance is equal to the total of accounts with a credit balance in […]

Carriage Inwards and Carriage Outwards “Carriage” can be seen as freight or transportation cost, it is the carrying costs related to the purchase and sale of goods. Often the buyer is responsible for the cost of carriage inwards whereas the seller is responsible for carriage outwards. Carriage inwards and carriage outwards are essentially delivery expenses […]

Prepaid Expenses At times, during business operations, a payment made for an expense may belong fully or partially to the upcoming accounting period. Such a payment (partly or fully) is treated as a prepaid expense (unexpired expense) for the current period. It is treated as an adjustment in the financial statements and this article will describe the treatment […]

Revenue Expenditure During the normal course of business, any expenditure incurred of which benefit is received during the same accounting period is called revenue expenditure. These expenses help a business sustain its operations and may not result in an increase in revenue. Examples of such expenses are wages, rent, power, bad debts, depreciation, telephone, printing, cost […]

Sundry Expenses The word “Sundry” is used for items which are irregular and insignificant to be listed individually. Sundry expenses are costs incurred during business operations that are not listed separately because they are usually small, rare, and do not relate to other general expenditures. They are comparatively small, miscellaneous in nature & can not […]

Meaning and Overview Examples Prepaid Expenses Journal Entry Prepaid Insurance Journal Entry Prepaid Rent Journal Entry Prepaid Salary Journal Entry Are Prepaid Expenses Assets? Where do Prepaid Expenses Appear? Prepaid Expenses in Profit & Loss Account Prepaid Expense is Which Type of Account? Treatment in Final Accounts Revision Video Quiz Conclusion   Meaning and Overview […]

Direct Expenses (Meaning & Definition) Examples Direct Expenses List (with PDF) Are Direct Expenses Operating Expenses? Direct Expenses in Trading Account Direct Expenses in Service Industry Indirect Expenses (Meaning & Definition) Examples Indirect Expenses List (with PDF) Are Indirect Expenses and Overheads the same? Indirect Expenses in Final Accounts Is Salary a Direct or Indirect […]

Meaning and Overview Examples Outstanding Expenses Journal Entry Journal entry for outstanding rent Journal entry for outstanding salary Journal entry for outstanding wages Journal entry for outstanding commission Outstanding Expenses are Asset or Liability? Where do Outstanding Expenses Appear? Outstanding Expenses in Trial Balance? Outstanding Expense is Which Type of Account? Treatment in Final Accounts […]

Capex and Opex Expenses are costs incurred for a consideration. An expense may be capital or revenue in nature and usually incurred by disbursal of money. Capex and Opex refer to capital expenditure and operating expenditure respectively. They can also be recognized by agreeing to pay off an obligation e.g. paying rent, buying machinery, paying taxes, […]

Deferred Revenue Expenditure It will be easier to understand the meaning of deferred revenue expenditure if you know the word deferred, which means “Holding something back for a later time”, or “postpone”. Deferred Revenue Expenditure is an expenditure that is revenue in nature and incurred during an accounting period, however, related benefits are to be derived in multiple […]

Preliminary expenses – Meaning All expenses incurred before a company is formed i.e. cost incurred before the start of business operations is termed as preliminary expenses. They are a common example of fictitious assets and are written off every year from the profits earned by the business. Examples of such expenses suffered before the incorporation […]

Accounts Payable – Meaning Accounts payable are obligations of a business that originate because of purchases made on credit (e.g. for raw material, finished goods etc.), the money is yet to be paid for these transactions. Accounts payable account can be created by anyone who buys goods or services on credit and promises to pay […]