Explain the Differences and Relationships Among Expenditures, Assets, and Expenses

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The Answer is An expenditure is an outlay of cash or incurment of a liability that could result in an expense or an asset being recorded for accounting purposes.
The expenditure results in an asset if it satisfies the definition and recognition criteria for an asset; otherwise, the amount must be expensed.
Previously recorded assets turn into expenses as the benefits from the assets are used up. For example, a payment to purchase a machine would result in an asset (property, plant, and equipment)because the machine is expected to generate future benefits, it results from a past transaction, it is under the control of the enterprise, and its future benefits are reasonably estimable. As the equipment is used, depreciation expense is recorded.

Explain the Differences and Relationships Among Expenditures, Assets, and Expenses

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Explain the Differences and Relationships Among Expenditures, Assets, and Expenses

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