Definition of expense

results from or measures the using up of an asset (e.g., depreciation) or incurrence of a liability (e.g., warranty expense) to obtain revenue in the current period. An expense can apply to the cost of merchandise sold or services rendered. Expenses apply to the ordinary course of business (e.g., salary expense) rather than to incidental transactions (e.g., fire loss). Expenses are deducted from revenue to derivenet income. An expense account is maintained for each type of expense for control purposes.

1. business cost incurred in operating and maintaining property. For purposes of information and in reporting to shareholders of publicly held corporations, expenses are calculated as the cost of goods and services used in the process of profit-directed business activities.
2. costs that are currently deductible, as opposed to capital expenditures, which may not be currently deducted but must be depreciated or amortized over the useful life of the property. Certain costs may be expensed for accounting purposes but may not be deductible or may be deductible later for tax purposes (goodwill, for example, and bad debts under the allowance method). Other costs may be tax deductible earlier than for accounting purposes (such as intangible drilling costs).

cost of doing business, not including pure expectation of loss.