Types of Expenses

From the accounting point of view any flow of money that can be in cash or in any form of payment , which generates a decrease in the accounting balance , is recognized as an expense. In other words, each time a certain amount of money leaves the account of a person or company to acquire a good or service, it is considered that an expense has been made.

This means that invariably the amount of money agreed upon in said operation must be made available to the other party involved in a purchase-sale contract. This, as stated in the previous paragraph, can be in cash or any other form of payment; It is usually carried out through bank transfers.

Among the benefits that the use of expenses has in certain periods or circumstances within an operation are closely related to the acquisition of both personal and business services, such as monetarily covering the commitments of water, electricity, telephone or other types of bills that are issued to the person who makes the expense.

From the business point of view, the expense , with the passage of time, will become a profit since assets (according to this example) were acquired through that operation, for the production of articles that will later be for sale; thus, not only is the initial expense recovered, but a profit is obtained in the best of cases.

Accounting these data corresponding to the expenses will be applied within what they call “double entry” on the right side of it. This is so because it is part of the liabilities of a company. It is important to know that the assets are listed on the left side.

Types of expenses

Discretionary expenses

This term is applied when the purchase-sale of a good or service that is required at the time is implicit in an operation. The nature of this type of operation is that for the company it is not usually very necessary, however, for other reasons the expense is executed. Generally the impulse is related to the aspect of desire or any other type of satisfaction of the person who performed said operation and expense.

Within a company, a budget item is created that allows members to develop activities that are within the recreational. Of course the hotel, restaurant and tourism industries exploit this desire.

Fixed costs

Expenses in which the company complies with the commitments made to other companies to obtain services or other types of liabilities that allow the company to function are thus considered. These payments are made in fixed periods of time such as a month, a year, a fortnight; and due to that time condition it is predictable to budget the amounts within a financial projection and from the accounting point of view they are invariably assigned to the corresponding accounts within the balance sheet.

I pay with credit card

 

Flexible expenses

Expenses that in some way cannot be avoided because it represents a necessity at the time, such as the fact that one suddenly realizes that an object of daily use is no longer useful and it is necessary to acquire another. However, you can control the moment in which the expense will be executed.

change from different countries

Ant expenses

It is a form of spending that greatly affects the family and business budget. The modality of the same is related to the idea that little by little the amount of what is spent is accumulated over a specific period of time and the person responsible for allocating the expense realizes that it was not so necessary and also went over budget.

Woman paying for coffee with cash

Unexpected expenses

Reference is made in accounting terms to the expenses that arise in emergency situations, so it is evident that they were not within a budget plan and for this reason it takes the organization out of balance financially.

This type of event is also usually generated on a personal level; one of the most recurrent cases being those related to health: attending a doctor; or death: death of a loved one.

Blank medical report

Variable expends

This is the name given to the amounts that are modified over time or also when they are executed at irregular times. In this type of expenses, the relationships between suppliers and accounts come into play in which, due to supply and demand, the prices of raw materials suffer upward modifications or vice versa, evidently bringing with them changes in the final balance of expenses. , that’s why they are variables.

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