Chapter 3 homework accounting
Calculate total income and expenses?
In accrual accounting, the amount of expenses that should be reported for a whole year is called “Total expenses.” Total expenses for a given period are the sum of all gross cash outlays plus any subsidiary costs that are still to be paid, such as operating costs, incentive fees, interest, and taxes. A company’s income statement can show how much money it made. The difference between cost and expense is that cost means how much money was spent, while expense means how much the thing bought was used. People often use these terms interchangeably, which makes it hard for people learning to be accountants to tell the difference.