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What is an expenditure in accounting terms?

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Quick Answer

In accounting, the word "expenditure" is used to indicate a cost that a company pays to acquire equipment or other assets. Expenditures can also reduce liabilities or be disbursed to owners. They can be considered a type of expense, but expenses and expenditures are listed differently on income statements. Expenditures usually span a period of more than one statement.

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What is an expenditure in accounting terms?
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When purchasing a depreciating asset, such as an expensive piece of equipment, a company can divide the cost of the equipment over several income statements to demonstrate that the benefit of the equipment's price is being realized consecutively. This means that a tractor purchased for $100,000 is not applied in full to the income statement relevant to the actual date of the tractor's acquisition. Instead, the $100,000 is broken down into installments of perhaps $500 per month for the remainder of time that the company owns the tractor.

Expenses are costs spent on operations, such as the purchase of goods, advertising, rent and employees' salaries. Expenses are different from expenditures because they are recorded on an income statement according to the actual period in which they expired. For example, a payroll expense is considered immediately applicable to the period in which it was issued, because it was spent on manpower that was already used.

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