Expenses provide future benefits, and assets measure the consumption of those benefits.

Question

Quizplus · Accepted Answer

Expenses are costs incurred by an entity in its operations, which are matched with revenue earned during a period to determine the entity's net income. On the other hand, assets are economic resources owned or controlled by an entity, which are expected to provide future economic benefits to the entity. Therefore, assets measure the future benefits to be consumed, while expenses record the cost of using up those benefits.

Expenses Provide Future Benefits, and Assets Measure the Consumption of Those