What is Revenue and Expenses in Accounting
What is Revenue
In this post, students will learn what is revenue and expenses in accounting. First Revenue has been explained in this post, and later Expense. So keep in touch with this post.
Formal Definition of Revenue
The gross increase in owner’s equity (capital) resulting from the operations and other activities of business.
Informal Definition of Revenue
Amounts a business earns by selling services and products. Amounts billed to customer for service and/or products.
Types of Revenue in Accounting
Sale of Products
Amounts earned from the sale of merchandise.
Sale of Services
Amounts earned from performing services.
Amounts earned from renting properties.
Amounts earned from investments.
You May also Read: What is Liabilities in Accounting and Its Types
What are Expenses in Accounting
Formal Definition of Expenses
Decrease in capital arising from the cost of goods, fixed assets, and service and supplies consumed in the operations of a business.
Informal Definition of Expenses
Expenditure of doing business. The equipment and other things used in business and had charge to business.
Additional Explanation of Expenses
Some examples of personal expenses that most individuals are familiar with are utilities, salaries and wages, advertising, building rental, and utilities.
Types of Expenses in Accounting
Expenditures for incidental materials needed in the conduct of business, such as office supplies.
Expenditures for work performed by employees.
Expenditures for taxes based on wages paid to employees.
Promotional expenditures, such as newspapers, handbills, television, radio, and mail.
Expenditures for basic services needed to function in the modern world, such as water, sewer, gas, electricity, and telephone. Most businesses track the amount spent for each type of utility service.
Expenditures paid to an owner of property (building) for use of the property. A rental agreement called a lease contains the terms.
Maintenance & Repairs
Expenditures paid to repair and or maintain buildings and/or equipment.
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