expenditure, disbursement, costs, expenses

Question

I'd like to know the differences, if any, among these synonyms.Any help will be highly appreciated. P.S. Maybe you can take a specific project or whatever to help make the explanation.

Clive · Accepted Answer

Hi,

I started to prepare comments on this, but I decided that you really need to get information from someone with a good accounting background.

Good luck, Clive

CalifJim · Answer

For this type of specialized vocabulary you need to go to an Accounting Forum!

Briefly, expenditures are whatever monetary amounts go out of the business entity. There is often a journal of disbursements to record such expenditures. "expenditure" is the more general term. "disbursement" is more specific, relating to specific transactions, the details of which (check numbers, etc.) are usually kept in a journal. "cost" is another more general term. "cost" is what is paid by the business entity in order to acquire some service or material. It may be the cost of employing people to do the work or the cost of the raw materials used in producing the product, and so on.
"expense" is one of the more tricky terms. These are costs incurred in the process of earning revenue. They are measured by the costs of assets consumed or services used during an accounting period. But expenditures made to acquire assets or to pay liabilities do not represent expenses. To be an expense the expenditure has to be directly related to earning revenue.

I pulled this material from my imperfect memory of some accounting I learned some time ago, so please consult a good dictionary of accounting terms, especially if you need the definitions in terms of strict accounting theory. In everyday work in accounting departments the terms are used much more loosely, but it's better if you find out the exact meanings.

CJ

Danyoo · Answer

I'll give it a go...

Expenditure usually means capital expenditure, i.e., amount of money you will need to spend to buy a major piece of equipment. For example, you might want to submit a budget for $2 million dollars to upgrade your company's computer system.

Disbursement means fund is paid out. For example, after you buy the new computer system, $2 million dollars will be disbursed from the capital expenditure budget fund to the supplier's account.

Cost means how much a certain product is worth based on materials and labor that went into making it. For example, you could say the cost to build a Camry sedan is $20,000. And if Toyota turns around and sell it for $22,000 price, than the profit generated will be $2,000.

Expenses are money you spend to get your job done. If you are a saleman, it would include the car expense, mobile phone, entertaining customers, etc.

Anonymous · Answer

thanks

expenditure, disbursement, costs, expenses

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