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A purchase is classified as a “cost” when it is something that is related to an asset. It's an “expense” when it is related to the ongoing operations of a business. For example, if you own a retail business of some kind and you buy a new building.

Examples of expenses include rent, utilities, wages, salaries, maintenance, depreciation, insurance, and the cost of goods sold.

In the context of companies that sell merchandise, the term purchases refers to the purchases of goods that are intended to be sold to customers. The cost of the goods that are sold are expensed on the income statement.

Unit 16. Costs, Purchases and Expenses are terms regularly used in discussing financial matters and in particular with reference to profit and loss statements. They are often used to mean the same thing, amounts being paid out by the business in return for goods, services or employee effort (Staff costs).

An expense is a purchase for the operation of a business that is usually less than $2,500. Unlike an asset, expenses do not maintain their worth for more than a year because the business usually consumes them immediately.

He purchased a ticket and went up on the top deck. Most of those shares were purchased from brokers. Some of the receipts had been for the purchase of cars. She opened the tie box and looked at her purchase.

Common expenses might include: Cost of goods sold for ordinary business operations. Wages, salaries, commissions, other labor (i.e. per-piece contracts) Repairs and maintenance. Rent. Utilities (i.e. heat, A/C, lighting, water, telephone) Insurance rates. Payable interest. Bank charges/fees.

examples: payment of salaries, payment of electricity bills, rent, etc. Expenses are purchases of items which can be treated as an outrite expense of the company like stationeries,cleaning supplies,fuel/lubricants etc.