For a layman, expenses, expenses and costs mean, in most cases, the same thing: an expense. When the student of Accounting Sciences or another similar area learns that there are differences between these three terms, one of the biggest problems, in general, is to distinguish between them.
In fact, expenditure is every financial expenditure, every sacrifice that an entity makes for the acquisition of a good or service. The concept of spending is quite broad. Among some examples of expenses, we can mention the acquisition of machinery, equipment, vehicles, furniture, tools, etc. An expense can become an investment that successively becomes a cost and an expense.
Cost is the expense, that is, the financial sacrifice that the entity bears when using the factors of production to perform a good or service. Costs can be understood according to the entity's segment. In commerce, the acquisition of goods is the cost, whereas in industry, it is understood as the acquisition of raw materials, inputs and labor in the production of a good.
Expenses are related to expenses used to obtain income. Expenses with salaries, rent, telephone, advertising, salesperson's commission, among others, are understood as expenses. In the DRE (Statement of Income for the Year), the “Cost of Goods Sold” represents expenses, although there may be confusion regarding the terminology used. For the author Eliseu Martins, for example, the correct one should be “Expenses of the Goods Sold”.
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Economy - Brazil School
Would you like to reference this text in a school or academic work? Look:
DANTAS, James. "Expenses, costs and expenses"; Brazil School. Available in: https://brasilescola.uol.com.br/economia/gastos-custos-despesas.htm. Accessed on June 27, 2021.
