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Cost Accounting: What is a Cost: Cost Versus Expense? 1 Views
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Description:
What is a Cost: Cost Versus Expense? Cost and expense are pretty similar terms when looking at traditional definitions but they’re a little different in business. While cost usually represents the cost of an asset at the time purchased, expense represents something that’s paid for over time (payroll would be an expense). They’re also different in financial statements. Cost is used in terms like “cost of goods sold” which just means how much did it cost to make whatever was made. Expenses are used in a more broad sense on financial statements, to find profit for a period after subtracting them from income (gross income or sales).
Transcript
- 00:00
And finance Allah shmoop what is a cost as in
- 00:05
a cost versus and expensive Shmoop think about life as
- 00:12
a grand tradeoff You decided Teo really go for it
- 00:15
and fulfill your dream of becoming a figure skater for
- 00:18
your shining fifteen minutes of fame in the Olympics and
Full Transcript
- 00:21
a few years of you know Disney on Ice afterwards
- 00:24
And that well you spent eighty hours a week for
- 00:27
a decade on the better part of your youth on
- 00:29
the ice spinning and twirling and doing that infinity thing
- 00:33
From age eight to twenty you spent the most precious
- 00:36
resource You had time dedicated to the mission of winning
- 00:40
an Olympic gold medal being the best skater you could
- 00:42
be and pretty much ignoring everything else While that time
- 00:46
the time you spent skating was a cost you had
- 00:49
a precious resource your time and you spent it all
- 00:52
pretty much on the ice You could have spent the
- 00:55
same amount of time learning how to code in Java
- 00:57
or C plus plus and or swift If you like
- 01:00
doing the iPhone app that's the language they use Or
- 01:03
you could've spent it mastering chemistry and biology and a
- 01:06
mission to cure cancer Or you could have spent it
- 01:09
mastering the meaning of the meaning of the meaning of
- 01:11
things and been a lawyer defending the rights of the
- 01:13
poor the downtrodden and the innocent But no you spent
- 01:17
your resource is on the ice Big cost They're hoping
- 01:20
for audience applause and some kind of satisfaction for having
- 01:24
landed on your feet Well that allocation of your precious
- 01:27
resource your time was a cost What's the ultimate cost
- 01:31
opportunity cost Yeah like you for went the opportunity of
- 01:35
being a cancer cure or a defender of the poor
- 01:39
the downtrodden or ah the next Mark Zuckerberg to instead
- 01:44
be skater So cost is a sacrifice of resource is
- 01:48
cost is a philosophy and event not necessarily even tracked
- 01:53
It's kind of a commitment to one thing over another
- 01:55
right So that's cost on what's expense Well not nearly
- 01:59
so Pete Those laden inhuman in a kind of sad
- 02:02
and expenses just in accounting structure where the dollar value
- 02:06
of some cost is calculated and then subtracted from what
- 02:09
are hopefully revenues Teo upset it expenses Just a line
- 02:14
item on an income statement with numbers It's not where
- 02:17
dreams go to die Or uh maybe just held out
- 02:20
for a while to be revisited later in life or 00:02:22.333 --> [endTime] being put you know on ice
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