What are Expenses?
Expenses refers to costs associated with running a business to generate revenue. These costs include products and services purchased to produce the business product or service as well as the general day to day utilities, rent, legal costs, employee wages and salaries, contractors, marketing and advertising, and freight costs etc. Expenses can be broken down into four types of expenses: either fixed, variable, accrued, or operational. Breaking the business expenses into different accounts makes it easier to track spending habits and can highlight areas where improvements can be made. An example: your work phone is an asset. The phone bill is an expense.