Expense

An expense is a cost incurred by the company to operate the business or generate revenue. Expenses reduce equity and include items such as salaries, rent, utilities, and depreciation. Expenses are recognized when incurred, not only when paid.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **Expense** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.