Expense – Expense is a type of expenditure which go through the income statement, it

is also the amount of money spent by the company, businesses, and organization’s

efforts in generating revenue while representing the cost of doing business. Expenses

could be in the form of Operating namely; Cost of Goods Sold (COGS), Marketing,

Advertising, and Promotion. Non-operating such as Interest and Taxes. Fixed such as

rent expense and salaries expense or an amount taken out of earnings such as debts.

Expenses are summarized and charged in the income statement as reduction from the

income whereas, all expenses are costs. Generally, In the business environment, the

expense refers to the consumption used when the companies, businesses, and

organization creates tactical purchases to gain revenue.

Expenditure – An expenditure represents a settlement either cash or credit to acquire

goods or services. It is recorded at a single point in time from the time of its purchase, in

contrast to an expense which is allocated over a period of time. Expenditure is highly

used to represent payments or disbursement caused by an organization to purchase an

asset. Furthermore, expenditures are also incurred after the settlement of debts or

liabilities. An expenditure are funds or resources used by the businesses,

organizations, or corporation to gain new assets, enhance existing ones, or decrease a

liability. Simply put, it’s the utilization of the resources for operations of a business and

this could be anything from purchases equipment to hiring employees. Obligatory

settlements or payment of liabilities such as invoices, receipts, and vouchers can also

be considered expenditures.
Expenditure can be classified into two different types specifically capital expenditure

and revenue expenditures. A capital expenditure is a long-term spending and a major

investment used when a company purchases an asset with a useful life of more than 1

year. Examples are purchasing of property, equipment, land, computers, and furniture’s

of the company. On the other hand, Revenue expenditure is used when a company

spends a money or resources on a short-term operating expense typically it will last for

less than a year. Examples are Cost of Goods Sold (COGS), Rent expense, Salaries

and wages, Marketing, Insurance, and Advertising.

Revenue, Gain, and Income are accounting terms usually presented in the income

statement.

REVENUE – Revenue is the starting point of income; it is what the total amount of

money that has been generated by the sale of company’s products or rendering of

services or from operating activities to what the price it is sold or rendered such as

retailers, and selling merchandise. Example of these are sales, sales revenues, and

interest income. The revenue always arises in the course of the entity and firms ordinary

activities such as the sales of goods or sales of services.

GAIN - is what the businesses, companies, and organization earn on selling such

assets which is not an inventory of the firms and entity. In other words, this sales activity

isn’t the actual trading of the business and among those goods that business sell on a

regular basis. The term “gain” is used to represent earnings which are from such

activities other than main operations, it is what we earn on selling business assets

usually a fixed asset of the business. The gain represents other items which can be

considered as an income or as part of an income which may or may not arise in the

ordinary activities of the business.

INCOME – The Income covers both revenue and gain, this means that revenue and

gain can be considered as an income or as part of an income. offers the cash flow to

generate the next production cycle and thus generates income, it is also the total profit

of the business and firms after deducting the total spending or expenses from the total
revenue. It can be obtained by deducting all the direct and indirect expenses from the

revenue.

To further illustrate, Let’s say that Daniel Maglalang are into the business of selling

computers and provided the following statements within the year of the accounting

period.

Sales of Computers: Php 200,000.00

Cost of Computers Sold: Php 120,000.00

Income from operations: Php 80,000.00

Tax and other expenses: Php 40,000.00

Gain from the sale of the business service vehicle: Php 10,000.00

Net Income: Php 50,000.00

In the given example, the “TOTAL INCOME” is Php 210,000.00 which comprises of

REVENUE and GAIN. Sales from Computers (Php 200,000.00) + Gain from the sale of

the business service vehicle (Php 10,000.00) = Php 210,000.00.

Income can be expressed as income from operations or gross income such as Sales of

computers (Php 200,000.00) – Costs of computers sold (Php 120,000.00) = Php

80,000.00. Income can also be expressed as net income (Php 50,000.00) or the excess

of total income exceeds the total expenses.

Revenue is simply the sales from selling computers amounting of Sales from

Computers (Php 200,000.00).

Gain which is part of the total income, amounting to Php 10,000.00 from the sale of the

business and service vehicle.