Costs of assets and services that are used in a company’s business activities. Results in a decrease in economic benefit due to:

1. Asset outflows
2. Asset usage
3. Incurrence of liabilities

Results in a decrease in equity

Examples: Rent payments, lease payments, telephone and internet usage for employees, transportation for employees, consulting fees, interest

QS: What are revenues

1. Asset outflow: cash or other assets going out into the Company
2. Usage: assets becoming less valuable as they are used
3. Liability: a debt is incurred

For example, ACR needs to print all their course materials for AAA. They get everything printed at SECAM and pay 50% up front in cash. The remainder will be paid once the printing is completed. They have an outflow of assets (cash) and they incur a liability.

QS: What are some expenses? Get creative, there are hundreds of different ones.

Exercise –Revenues and expenses

Review the Statement of Profit & Loss for Bralirwa and Identify the revenue and expenses.