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.Know More
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.Learn more about Accounting
Prime cost is the total production inputs needed to create a given output. More generally, prime cost is the total amount of material and labor necessary to create a product. Businesses use prime cost to determine the price of a product and to increase profit margins.Full Answer >
Computers are used in accounting for storing and analyzing financial data, automation, accuracy, data access and reliability. Other uses for computers in accounting include scalability, speed, security, cost effectiveness and visual representation.Full Answer >
Creative accounting refers to any accounting practice that is technically correct but deviates from how accounting policies were intended to be used. In general, creative accounting capitalizes on loopholes in generally accepted accounting principles in order to disguise financial performance, such as by keeping debt off a balance sheet.Full Answer >
Throughput accounting is an offshoot of variable cost accounting that treats direct material costs as the only variable cost, while all other costs are assumed to be fixed, explains Richard J. Lukesh of Turnaround.org. The accounting approach was developed by Eliyahu Goldratt as part of the Theory of Constraints paradigm.Full Answer >