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'''Rdddfdd4#''''''Expenditure''' is an outflow of [[money]], or any form of [[Wealth|fortune]] in general, to another person or group to pay for an item or service, or for a category of [[cost]]s. For a [[leasehold estate|tenant]], [[renting|rent]] is an expense. For students or parents, [[tuition]] is an expense. Buying food, clothing, furniture or an automobile is often referred to as an expense. An expense is a cost that is "paid" or "[[Remittance|remitted]]", usually in exchange for something of value. Something that seems to cost a great deal is "expensive". Something that seems to cost little is "inexpensive". "Expenses of the table" are expenses of [[dining]], refreshments, a [[Banquet|feast]], etc.
In [[accounting]], '''expense''' has a very specific meaning. It is an outflow of cash or other valuable assets from a person or company to another person or company. This outflow of cash is generally one side of a trade for products or services that have equal or better current or future value to the buyer than to the seller. Technically, an expense is an event in which an [[asset]] is used up or a [[liability (accounting)|liability]] is incurred. In terms of the [[accounting equation]], expenses reduce owners' [[equity (finance)|equity]]. The [[International Accounting Standards Board]] defines expenses as:{{quote|...decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.<ref>IFRS Framework, F.70</ref>}}
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Section 162(a) of the Internal Revenue Code is the deduction provision for business or trade expenses.<ref>{{USCSub|26|162|a}}</ref> In order to be a trade or business expense and qualify for a deduction, it must satisfy 5 elements in addition to qualifying as an expense. It must be (1) ordinary and (2) necessary (''[[Welch v. Helvering]]'' defines this as necessary for the development of the business at least in that they were appropriate and helpful). Expenses paid to preserve one's reputation do not appear to qualify).<ref>{{ussc|name=Welch v. Helvering|link=|volume=290|page=111|pin=113|year=1933}}</ref> In addition, it must be (3) paid or incurred during the taxable year. It must be paid (4) in carrying on (meaning not prior to the start of a business or in creating it) (5) a trade or business activity. To qualify as a trade or business activity, it must be continuous and regular, and profit must be the primary motive. An expense can be a loss or profit. But loss or profit need not really be an expense.
Section 212 of the Internal Revenue Code is the deduction provision for investment expenses.<ref>{{USC|26|212}}</ref> In addition to being an expense and satisfying elements 1-4 above, expenses are deductible as an investment activity under Section 212 of the Internal Revenue Code if
In investing, one [[controversy]] that mounted throughout 2002 and 2003 was whether companies should report the granting of [[stock option]]s to [[employee]]s as an expense on the [[income statement]], or should not report this at all in the income statement, which is what had previously been the norm.
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