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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).

Language:
English Language

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

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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