Expenses

Expenses are defined as the cost of the goods sold, or services used up, in the process of producing revenues for a company.  Expenses are sometimes referred to as the cost of doing business, since expenses include all the items needed to attract and service customers in order to produce revenue.

The outflow of expenses from a company creates a decrease in owner's equity, since expenses are likely to cause a decrease in assets, such as cash, or an increase in liabilities, such as accounts payable.  The expenses of a company are reported on the Income Statement.