How Do You Classify Expenses?

What is considered a expense?

An expense is the cost of operations that a company incurs to generate revenue.

As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation..

What are 2 types of expenses?

There are two types of expenses. There are (jargon alert) ‘cost of sales’ and ‘overheads’. Cost of sales or sometimes called ‘direct costs’ are those costs in the business that directly impact the sales. For example, if you are making pens, then ink would be a direct cost.

What kind of expense is laundry?

A laundry expense is an expense related to the washing, drying or ironing (but not drycleaning) of deductible work-related clothing (e.g., protective clothing and compulsory uniforms).

What are the different types of business expenses?

Understanding Business ExpensesAdvertising and marketing expenses.Credit card processing fees.Education and training expenses for employees.Certain legal fees.License and regulatory fees.Wages paid to contract employees.Employee benefits programs.Equipment rentals.More items…•

What are the 4 types of expenses?

You might think expenses are expenses. If the money’s going out, it’s an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far).

What are 3 basic budget categories?

As personal finance site Beating Broke explains, virtually all of your expenses fall into three overall categories: Fixed expenses, variable expenses, and non-necessities. Fixed costs include your rent, which stays the same every month. Variable costs would include things like your utility bills or food.

Is Internet a fixed expense?

In the area for fixed expenses, you’ll need to list all expenses you have that are the same every month. For example, if your car payment is $350, you can list that amount as a fixed expense. Here are some other fixed expenses: … Service payments (cable, Internet, cell phone, satellite radio, etc.)

What type of expense is a car payment?

It’s much easier to budget for fixed expenses than it is to budget for a variable expense or discretionary expense. Typical household fixed expenses are mortgage or rent payments, car payments, real estate taxes and insurance premiums.

Is an electric bill a fixed expense?

Utility bills can be considered both fixed and variable expenses. … With the former, electricity is a variable cost, changing monthly as usage increases or decreases with production and profit. With the latter, electricity is a fixed cost, as the usage remains the same no matter what and does not affect profit.

How do you classify expenses in accounting?

Types of ExpensesCost of Goods Sold (COGS) Cost of Goods Sold (COGS) … Operating Expenses – Selling/General and Admin. Operating expenses are related to selling goods and services and include sales salaries, advertising, and shop rent. … Financial Expenses. … Extraordinary Expenses. … Non-Operating Expenses.

What are the categories of expenses?

Expense CategoriesAdvertising. Any materials for promoting your business and the cost of developing those.Bank Fees. … Business Insurance. … Business Uniforms. … Car Expenses. … Donations. … Commissions and Fees. … Contract Labor.More items…

What are expenses examples?

Examples of ExpensesCost of goods sold.Sales commissions expense.Delivery expense.Rent expense.Salaries expense.Advertising expense.

What are professional expenses?

Professional fees are prices charged by individuals specially trained in specific fields of arts and sciences, such as doctors, architects, lawyers, and accountants. “Professional Fees” is usually an income account used by a professional firm in recording its revenues. … Definition of professional fees.

What are basic expenses?

What Is Considered to Be a Living Expense? Living expenses are expenditures necessary for basic daily living and maintaining good health. They include the main categories of housing, food, clothing, healthcare, and transportation. Understanding what’s involved in each of these areas will help you to budget for them.

What are examples of monthly expenses?

Fixed Expenses – Definition, Examples and ListsMortgage(s)Rent.Property taxes (if paying monthly)Strata fee / condo fee.House / tenant insurance.Utility bills (cable, cell, electricity, water, etc.)Lease / car loan payment.Vehicle insurance (if paying monthly)More items…