what is difference between cost and expenditure and expence
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Answer Posted / nana
An expense is reported on the income statement. An
expense is a cost that has expired, was used up, or was
necessary in order to earn the revenues during the time
period indicated in the heading of the income statement. For
example, the cost of the goods that were sold during the
period are considered to be expenses along with other
expenses such as advertising, salaries, interest,
commissions, rent, and so on.
Expenditure is a payment or disbursement. The
expenditure may be for the purchase of an asset, a reduction
of a liability, a distribution to the owners, or it could be
an expense. For instance, expenditure to eliminate a
liability is not an expense, while expenditures for
advertising, salaries, etc. will likely be recorded
immediately as expenses.
A cost is a sacrifice of resources. So when we buy
something, we cease to have the ability to use these
resources (typically cash or credit line) to buy something
else. The price of each item measures the sacrifice we must
do to acquire it.
Whether you pay cash or use any other asset, and to pay
now or later (if we use a credit card), the cost of an item
purchased is represented by what we give up as a result.
Cost will be a cash outflow that may bring you benefit but
expenditure is a cash outflow that will only cost you money
but not giving you any feedback
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