Technical definition
A decrease in economic benefit caused by consuming resources or incurring obligations during a period.
How it works
Expenses are recognized in the period in which resources help generate activity or are otherwise consumed. Payment can occur before, during or after expense recognition.
Everyday example
December wages paid in January are a December wage expense and a year-end wage payable.
Common pitfall
Buying a long-lived asset is not immediately a full expense; its cost is allocated over periods of use.