EXPENSE is the money spent or cost incurred in an entity’s efforts to generate revenue. Expenses represent the cost of doing business in the sum total of the activities directed towards making a profit.
Also take note that cash payments do not always mean that an expense has occurred. Remember, may asset tayo and na-discuss ko na ‘yan before. Some asset also involves cash payment.
Expense, gastos sa tagalog. From previous example, ‘yung cost ng halo-halo or ingredients na binili mo is one example of expense.
Since nasa introduction pa lang tayo ng accounting, I won’t discuss the deep meaning of expenses. Matututunan niyo ‘yan sa financial accounting. Here, I only discussed the meaning of expense generally.
Another example, bumili ako ng gas stove, table and chairs, fish ball, kikiam and siomai para mag start ng small business sa harap ng bahay. The question is, ano sa mga binili ko ang asset at expense? They both involve cash payment or money spent.
Asset natin ang gas stove and tables and chairs. The rest is expenses. Yes, they both involve cash payment BUT looking back the definition of expense, cost of doing business in the sum total of the activities DIRECTED TOWARDS MAKING A PROFIT. Take note of the word ‘direct’. Ang gas stove at tables in chairs is indirect activities towards making a profit. Also always take note ang difference ng real account sa nominal account. In that way, mas madaling ma-identify ang accounts.
....END OF THIS CHAPTER...
Next chapter will be exercises for me to know kung may natutnan ba kayo sa previous chapters and ano pa ba ang dapat kong i-broaden ang explanation.
I'll post it later😊.
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Introdution to Accounting
RandomCalling the attention of all aspirant soon to be CPA'S and any other related courses to stop by and read this book. This is a taglish book for better understanding of explanations. Read in order to learn. Listen in order to understand. So what ar...
