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Simple English definitions for legal terms
current expense
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A quick definition of current expense:
A current expense is money spent by a business to keep it running and produce its products or services. This includes things like salaries, rent, and utilities. Current expenses are different from capital expenses, which are investments in long-term benefits. Some expenses, like medical costs and moving expenses, may be tax-deductible.
A more thorough explanation:
Definition: An expense incurred in running a business and producing output. It is also known as operating expense.
Example: Rent, utilities, salaries, and office supplies are all examples of current expenses. These expenses are necessary for the day-to-day operations of a business and are deducted from the revenue earned during the same period.
Explanation: Current expenses are the costs that a business incurs to keep its operations running smoothly. These expenses are deducted from the revenue earned during the same period to calculate the net income. For example, if a business earns $10,000 in revenue and incurs $5,000 in current expenses, its net income would be $5,000. This net income is then used to pay taxes, invest in the business, or distribute profits to shareholders.