Expense

Expenditure is an outflow of money, or any form of fortune in general, to another person or group to pay for an item or service, or for a category of costs. For a tenant, 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 "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 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 is incurred. In terms of the accounting equation, expenses reduce owners' equity. The International Accounting Standards Board defines expenses as:

Bookkeeping for expenses

In double-entry bookkeeping, expenses are recorded as a debit to an expense account (an income statement account) and a credit to either an asset account or a liability account, which are balance sheet accounts. An expense decreases assets or increases liabilities. Typical business expenses include salaries, utilities, depreciation of capital assets, and interest expense for loans. The purchase of a capital asset such as a building or equipment is not an expense.
Cash flow

In a cash flow statement (flow of funds statement), expenditures are divided into three categories:

Operating: Operational expense – salary for employees  
Investing: Capital expenditure – buying equipment  
Expenditures (financial) Financing expense – interest expense for loans and bonds  

Whether a particular expenditure is classified as an expense, which is reported immediately on the business's income statement or whether it is classified as a capital expenditure (or an expenditure subject to depreciation) which is not an expense flow of funds statement. Though, these latter types of expenditures are reported as expenses when they are depreciated by businesses that use accrual-basis accounting- as most large businesses and all C corporations do.

Defining

Defining an expense as capital or income using the most common interpretation depends upon its term.

When an expense is seen as a purchase it alleviates this distinction. Soon after the purchase, (that which was expenses holds no value), then it is usually identified as an expense. It will be viewed as capital with life that should be amortized/depreciated and retained on the balance sheet if it retains value soon and long after the purchase.
Deduction of business expenses under the United States tax code