Expenses are outflows or other using up of assets or increase of liabilities，or a combination of both，during a period from producing or delivering goods，rendering services，or carry out other activities that constitute the entity's major or central operations.

An expense always causes a decrease in owner's equity.The related changes in the accounting equation can be either a decrease in assets or an increase in liabilities.An expense reduces assets if payment occurs at the time that the expense is incurred.If the expenses will not be paid until later，the recording of the expenses will be accompanied by an increase in liabilities.

Expenses include the cost of employee's salaries，advertising，rent，utilities，and the gradual depreciation of fixed assets.All these cost are necessary to attract and serve customers and thereby earn review.Expenses are sometimes described as“entity efforts”or“entity sacrifices”associated with the earning of revenue.

Expenses are classified into three categories:cost directly associated with the revenues of the periods;cost associated with the period on some basis other than a direct relationship with revenue;cost that cannot，as a practical matter，be associated with any other period.