Expense

It is the amount spent in order to produce and sell the goods and services which generate the revenue. For example, payment of salaries to bring some benefit to the business. Expenses can be of the following types :
o Revenue Expenditure or Expenses
When the benefit of an expense is not likely to be available for one year or less, it is treated as revenue.
For example, salaries, wages, power and fuel, maintenance expenses of assets etc.
o Capital Expenditure
When the benefit of an expenditure is not exhausted in the year in which it was incurred but is available over a number of years, it is considered as Capital Expenditure. An example is the expenditure incurred for purchase of fixed assets.
o Deferred Revenue Expense
When the benefit of a revenue expenditure continues for more than one year, it is treated as Deferred Revenue Expense. Such expenditure is not written off in one year but over a period of 2 or 3 years.

For example, expenditure incurred on heavy advertisement

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