Expenditure
The disbursement of cash or incurrence of a liability to acquire goods, services, or assets, which may be expensed immediately or capitalized as an asset.
Expenditure
The disbursement of cash or incurrence of a liability to acquire goods, services, or assets, which may be expensed immediately or capitalized depending on the nature and future benefit of the acquisition.
For instance, when a business spends $5,000 on monthly office supplies, it records an expenditure that becomes an immediate expense. However, when it spends $50,000 on equipment expected to last five years, the expenditure is capitalized as an asset and expensed gradually through depreciation.
Expenditures are classified as either revenue expenditures (for day-to-day operations, expensed immediately) or capital expenditures (for long-term assets, capitalized and depreciated). This distinction affects reported net income, asset values, and tax calculations. Managing expenditures effectively is crucial for controlling costs, maintaining adequate cash flow, and ensuring appropriate resource allocation.