Differences between expenses and costs

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Through the Cost Accounting will determine which costs are incurred in the community.
The detection of the types of costs can (cost accounting) are made from the income statement using a reconciliation. It is clear that there are similarities but also differences are between the lower expenses of the income statement and the cost of cost accounting. 

 

The differences between expenses and costs can be derived from the definition of the cost concept. Costs are assessed properly target-related consumption of goods and services (resources) of a particular accounting period. According to this definition, expenses and costs differ mainly in the following aspects:

 

• performance-related approach: Costs incurred only for certain services. Expenses that are not the intended performance (service expenses unrelated) are therefore no costs.
 

• Evaluated consumption of goods and services: In the evaluation of consumption may be differences between the income and the cost and management accounting. 

 

For example, the depreciation and amortization of-income depend on the useful life, which is given with goodwill amortization table. The depreciation amount in the cost accounting is based on the actual expected economic useful life of the asset. Also, be recognized as an expense only the regular consumption of resources. Extraordinary expenses are therefore no costs.

Again interest rates can have different values. While the income statement includes only the accrued interest on borrowings are generally on equity and debt interest (imputed interest) in the cost accounting. The equity interest while holding down from the lost profit from an alternative investment opportunity.

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