Purchase as Expense
A purchase is not necessarily an expense in accounting. A purchase is simply the act of acquiring goods or services by exchanging money or other assets.
However, a purchase can become an expense when the goods or services acquired are used up or consumed in the normal course of business. At that point, the cost of the goods or services is recognized as an expense in the income statement.
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For example, if a business purchases inventory to sell, the cost of the inventory is not immediately recognized as an expense. Instead, it is recorded as an asset on the balance sheet until it is sold. When the inventory is sold, the cost of the inventory is recognized as an expense in the income statement.
Similarly, if a business purchases office supplies, the cost of the supplies is not immediately recognized as an expense. Instead, it is recorded as an asset on the balance sheet until the supplies are used up. When the supplies are used up, the cost of the supplies is recognized as an expense in the income statement.
In summary, a purchase is not necessarily an expense in accounting. It only becomes an expense when the goods or services acquired are used up or consumed in the normal course of business.
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