The terms “expense” and “expenditure” are often confused with one another due to the similarity in their definitions.
Expense vs Expenditure
The main difference between expense and expenditure is that the former is used when companies make strategic purchases to increase revenue, while the latter talks about the amount of money incurred by the corporation due to the acquisition of an asset.
“Expense” is used when we are either talking about a single purchase in the complete list of purchases or when mentioning purchases that have taken place in the past.
“Expenditure” can be used to talk about either a whole list of purchases, such as assets or disbursements. “Expenditures” can also be used to relieve oneself of some form of liability.
Comparison Table Between Expense and Expenditure (in Tabular Form)
| Parameters of Comparison | Expense | Expenditure |
|---|---|---|
| Meaning | It is used when referring to past purchases, and also when talking about a single item purchased. | It is used when referring to a whole list of purchases or any form of disbursement. |
| Meaning (in terms of corporations) | Expenses are the strategic purchases made by companies to increase their revenue. | Expenditures are the final amounts on bills incurred due to the purchase of an asset by the corporation. |
| Frequency of occurrence | Expenses are seen to occur many times over a given period (such as a fiscal year of an organization). | Expenditures are final amounts, so they occur in lesser frequency over a specific period of a company. |
| Reason | Corporations make expenses so that they can make ordinary day to day purchases for the company. | Corporations make expenditures for significant assets and things concerning revenue. |
| Examples | Expenses for an organization include employee salaries and healthcare benefits. For citizens, it includes rent and food purchases. | For corporations – capital investments and investment of shares. For citizens, it includes mortgages and property investments. |
| Time frame | When looking at financial accounts, expenses are always compiled for a small term due to the higher number of times they occur. | In financial accounts, expenditures are compiled for a longer-term due to the lower number of occurrences. |
What is Expense?
The purchases made by a person on a day-to-day basis can be considered to be “expenses”. The term can also be used to talk about investments made in the past.
The purchases of regular citizens include rent for their homes, food supply or groceries, or any form of shopping.
One common form of using the word “expense” is metaphorical; wherein a person is talking about some sacrifice they made to achieve something or a metaphorical “price” they had to pay.
Example –
“At the expense of losing half our staff, we will be able to raise our profits by 18 per cent this year.”
“We were able to defeat them in battle, but at what expense?”
In the business world, the word expense can also be used to talk about the various strategic purchases made by the company to raise its revenue.
The example of “expenses” made by corporations are – salaries of employees, maintenance bills of their offices etc.
Expenses are measured in the short term by organizations, and this is due to the higher frequency in which they occur.
What is Expenditure?
An “expenditure” is used when one is referring to a whole list of purchases or any form of disbursement. They are the total amount or the entire bill of purchases made at an instance.
For a citizen, one would talk about “major expenditures”, which would include property or real-estate investments such as mortgages, or investments made in a business. “Expenditures” can also be used to relieve oneself of some form of liability.
The term “expenditure” can also be used when talking about the amount of money incurred by the corporation due to the acquisition of an asset.
It merely means whatever significant investment is made by the company, the final costs all complied together are referred to as an “expenditure”.
The “expenditures” made by a company include those that affect capital and revenue on a significant scale, such as – new ownership of another company, or purchase of shares and stock.
“Expenditure” is calculated and compiled over a more extended period for a company, such as at the end of a fiscal year. The reason for doing so is the lower frequency at which one sees major “expenditures” being made.
Main Differences Between Expense and Expenditure
- Expenses can be used to talk about either a single purchase out of many or any purchase made in the past. Expenditure is used when referring to a whole list of investments or any form of disbursement.
- Through a business standpoint, an expense is a strategic purchase made by companies to increase their revenue. At the same time, expenditures are the final amounts on bills incurred due to the purchase of an asset by the corporation.
- Expenses for an organization include employee salaries and healthcare benefits, and for citizens, it includes rent and food purchases. Expenditures for corporations involve capital investments and investment of shares in other companies.
- Expenses are seen to occur many times over a given period while expenditure is calculated and compiled over a more extended period for a company, such as at the end of a fiscal year.
- Expenses of the company include ordinary day to day purchases, while expenditures include capital and revenue investments.
Conclusion
The words expense and expenditure have similar meanings. The word expense could mean day-to-day purchases made by a citizen such as rent or food, and for a company, it could mean the payment of salaries of employees.
Expenditure, on the other hand, are long term investments made by individuals, or the total amounts received by a company after the purchase of property or assets. Understandably, the two words have differences in terms of the period in which they are calculated as well as the size of the investment.
References
- https://www.sciencedirect.com/science/article/pii/S0167629604000633
- https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-2370.2007.00228.x