| Expense |
Article Index for Expense |
Information AboutExpense |
| CATEGORIES ABOUT EXPENSE | |
| generally accepted accounting principles | |
|
The official definition of ''expense'' used by International Accounting Standards Board is (quotation from IFRS Framework): Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. {Link without Title} All expenses are divided into operational, capital, and financial ones. Examples:
An important issue in Accounting is whether a particular expenditure is classified as an opex, which is reported immediately to the investing Public in the business's Income Statement ; or whether it is classified as a Capital Expenditure or an expenditure subject to Depreciation , which is not. These latter types of expenditures are reported as expenses eventually, but not immediately, by businesses that use Accrual-basis Accounting , which is most large businesses and all 'C' corporations. The most common interpretation of whether an expense is of capital or income variety depends upon its term. Viewing an expense as a purchase helps alleviate this distinction. If, soon after the "purchase", that which was expensed holds no value then it is usually identified as an income expense. If it retains value soon and long after the purchase, it will be viewed as capital with life that should be Amortized / Depreciated and retained on the Balance Sheet . In investing, one Controversy that mounted throughout 2002 and 2003 was whether companies should report the granting of Stock Option s to Employee s as an expense on the Income Statement , or should not report this at all in the income statement, which is what had previously been the norm. SEE ALSO
EXTERNAL LINKS
|
|
|