An expense is a cost that a company incurs as part of its business operations, such as the purchase of goods or services, payment of wages or salaries to employees, or the cost of renting or owning property. Expenses are subtracted from a company's revenue to calculate its net income, which is the amount of profit that the company has earned over a specific period of time.

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Expenses can be categorized in different ways depending on the nature of the cost. For example, expenses can be classified as direct or indirect expenses. Direct expenses are those that are directly related to the production or sale of a specific product or service, such as the cost of raw materials or direct labor. Indirect expenses, on the other hand, are those that are not directly linked to the production or sale of a product or service, such as rent, utilities, or office supplies.

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Expenses are an important aspect of a company's financial management, as they can have a significant impact on the company's profitability and cash flow. Companies must carefully manage their expenses to ensure that they are operating efficiently and effectively, while also maintaining a healthy level of profitability. This may involve cost-cutting measures, such as reducing overhead costs or renegotiating supplier contracts, as well as strategic investments in areas that can drive growth and revenue.

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