What Are Expenditures In Accounting - Definition - Meaning - Examples - Explanation - Types

Expenditures are the costs against which payment is made in advance but the benefits against which are received later on. The benefits will be received within one year known as Revenue Expenditures or Expenses or Expired Costs while if these are received for more than one year, then these will be treated as Capital Expenditures. Examples are Acquiring Costs of Fixed Assets, Cost of Acquiring Intangible Assets, Wages paid for the installation of machinery, construction of the buildings, Salaries, Expenses, Outstanding Expenses, Prepaid Expenses, Unearned Revenues, Accrued Incomes / Revenues, etc.

You may also be interested in, “Expenditures VS Expenses”

Types of Expenditures

Capital Expenditures are those costs which acquired by the business for more than one year. These are incurred for acquiring Fixed Assets / Non Current Assets. Examples are Purchasing Costs of the Machinery, Buildings, Furniture, etc., Additions To Machinery, Wages Paid for the Installment of Machinery, Cost of Acquiring Intangible Assets such Goodwill, Patents, etc.

 

Revenue Expenditures are the expenses against which the benefits are received by the company but the payment will be made later on. Examples are Rent Expenses Payable, Salaries Expenses Payable, Outstanding Expenses. If these are paid in Cash according to Cash Basis of Accounting System, then these are expired cost expenses and recorded only in Income Statement / Profit And Loss Account as Rent Expenses account, Salaries Expense Account, Outstanding Expense Account. In case of Accrual Basis of Accounting, if the payment is not made, these are recorded as Outstanding Expenses or Current Liabilities. If the payment is made in Cash, then Revenue Expenditures are treated as Expenses and recorded in Income Statement.