Expense vs Expenditure: Difference and Comparison

The terms “expense” and “expenditure” are confused due to the similarity in their definitions.

Key Takeaways

1. Expenses are costs incurred during business operations; expenditures are payments made for acquiring assets or reducing liabilities.
2. Expenses are recognized on an income statement; expenditures may appear on the balance sheet or income statement.
3. Expenses impact profit and loss calculations; expenditures can affect the financial position and cash flow.

Expense vs. Expenditure

The difference between expense and expenditure is that the former is used when companies make strategic purchases to increase revenue. The latter talks about the amount of money the corporation incurred from acquiring an asset.

“Expense” is used when talking about a single purchase in the complete list of assets or when mentioning purchases that have occurred in the past.

“Expenditure” can be used to discuss purchases, such as assets or disbursements. “Expenditures” can also relieve oneself of some form of liability.

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Comparison Table

Parameters of Comparison	Expense	Expenditure
Meaning	It is used when referring to past purchases and also when talking about a single item purchased.	It is used when referring to a list of purchases or any form of disbursement.
Meaning (in terms of corporations)	Expenses are the strategic purchases made by companies to increase their revenue.	Expenditures are the final amounts on bills incurred due to the purchase of an asset by the corporation.
Frequency of occurrence	Expenses occur many times over a given period (such as an organization’s fiscal year).	Expenditures are final amounts, so they occur in lesser frequency over a specific period of a company.
Reason	Corporations make expenses to make ordinary day-to-day purchases for the company.	Corporations make expenditures for significant assets and things concerning revenue.
Examples	Expenses for an organization include employee salaries and healthcare benefits. For citizens, it provides rent and food purchases.	For corporations – capital investments and investment of shares. For citizens, it includes mortgages and property investments.
Time frame	When looking at financial accounts, expenses are always compiled for a short term due to the higher number of times they occur.	In financial accounts, expenditures are compiled for the long term due to fewer occurrences.

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What is Expense?

The purchases made by a person on a day-to-day basis can be considered to be “expenses.” The term can also be used to talk about investments made in the past.

The purchases of regular citizens include rent for their homes, food supplies or groceries, or any form of shopping. One common condition of using the word “expense” is metaphorical, wherein a person talks about a sacrifice they made to achieve something or an extended “price” they had to pay.

Example –

“At the expense of losing half our staff, we will be able to raise our profits by 18 percent this year.”

“We could defeat them in battle, but at what expense?”

In the business world, the word expense can also be used to talk about the various strategic purchases made by the company to raise its revenue. Examples of “expenses” made by corporations are – salaries of employees, maintenance bills of their offices, etc.

Expenses are measured in the short term by organizations, and this is due to the higher frequency in which they occur.

 

What is Expenditure?

An “expenditure” is used when one is referring to a whole list of purchases or any form of disbursement. They are the total amount or the entire bill of purchases made at an instance.

For a citizen, one would talk about “major expenditures,” including property or real-estate investments such as mortgages or investments made in a business. “Expenditures” can also relieve oneself of some form of liability.

The term “expenditure” can also be used when talking about the amount of money incurred by the corporation due to the acquisition of an asset. It merely means whatever the company makes a significant investment, the final costs all complied together are referred to as an “expenditure.”

The “expenditures” made by a company include those that affect capital and revenue on a significant scale, such as – new ownership of another company or the purchase of shares and stock.

“Expenditure” is calculated and compiled over a more extended period for a company, such as at the end of a fiscal year. The reason for doing so is the lower frequency at which one sees major “expenditures” made.

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Main Differences Between Expenses and Expenditure

1. Expenses can be used to talk about either a single purchase out of many or any purchase made in the past. Expenditure refers to a whole list of investments or any form of disbursement.
2. From a business standpoint, a company’s expense is a strategic purchase to increase its revenue. At the same time, expenditures are the final amounts on bills incurred due to the purchase of an asset by the corporation.
3. Expenses for an organization include employee salaries and healthcare benefits; for citizens, it provides rent and food purchases. Expenditures for corporations involve capital investments and investment of shares in other companies.
4. Expenses occur over a given period, while expenditure is calculated and compiled over a more extended period for a company, such as at the end of a fiscal year.
5. The company’s expenses include ordinary day-to-day purchases, while expenditures include capital and revenue investments.

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References

1. https://www.sciencedirect.com/science/article/pii/S0167629604000633
2. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-2370.2007.00228.x

Last Updated : 11 June, 2023