Answer to Question #176012 in Economics for Sirport

Question

Is an asset is similar to expense ?

Answer 1

The main difference. As you can see from the definitions of both terms, the key difference between an expense and an asset is time. An asset represents any source of future economic benefit to the firm beyond one year, while expense is an item that is of full utility to the company. Another major difference between expenses and assets is that expenses are deducted from income, so they reduce taxable income, but expenses can never be amortized, and assets are not deducted from income, but assets whose value decreases over time (usually long-term assets ) can be amortized.

Expenses are less expensive and less expensive services or goods that a company purchases to conduct business. Expenses are directly deducted from taxable income in the year in which they are incurred, or by paying in cash that year. The costs are usually used in a shorter period of time. Below are examples of expenses that include rent, health insurance, food, clothing, entertainment, travel, office supplies, printer, utilities, and ink cartridges.