Easy Explanation Notes with Examples

Expense and Expenditure

Expense is a type of cost that has been expired and incurred to generate revenues, it is presented in profit and loss statement of a company. For example, electricity charges, payroll and raw material consumed etc.

Expenditure is a payment, made for the purchase of an asset or for reduction of a liability. For example, a payment of $500 to the company’s creditor will be considered as the expenditure.


To clarify the difference between an expense and an expenditure, a hypothetical example is being discussed here, where an XY Company incurred the expenditure by purchasing textile related printing machinery for $ 2000, the machinery will be intended to print 2500 meter cloth. Assuming the machine’s useful life is 8 years, under the straight-line method of depreciation, the depreciation expense per year will be ($2,000/8) $250.

Difference between an Expense and an Expenditure

Basis of Difference



Meaning It is a type of cost that expires/ uses to generate revenues. It is a payment/ disbursement for a purchase of an asset or for settlement of a liability.
Examples Salary paid, building rent and transportation cost of inventory etc. Payment to purchase new land for business or settlement of long-term loans etc.
Tenure Short term Long term

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