Expense vs. Charge — What's the Difference?
Edited by Tayyaba Rehman — By Maham Liaqat — Updated on April 6, 2024
An expense is a cost incurred in the process of earning revenue, while a charge is a fee for services or goods.
Difference Between Expense and Charge
Table of Contents
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Key Differences
Expenses are the costs a company incurs during its operations to generate revenue. These costs can include salaries, rent, and utilities, and are recorded in the company's financial statements, impacting the net income. On the other hand, a charge is a specific fee or cost that a company or individual pays for receiving a service or product. Charges can be one-time fees, recurring payments, or penalties, and do not necessarily relate directly to the operational activities of generating revenue.
While expenses are integral to the financial accounting of a business, reflecting the costs associated with its operational activities, charges are more transaction-specific. Charges can apply to both businesses and individuals in various contexts, such as banking fees, service charges, or charges for healthcare services. Whereas, expenses primarily relate to the business operations and are a key component in calculating the profitability of a company.
The treatment of expenses and charges in financial accounting also differs. Expenses are recorded over the period they relate to and are matched against revenues of the same period to determine the profit or loss. Charges, however, are often recorded as they are incurred and may be capitalized or expensed depending on their nature and the accounting policies of the business.
Expenses play a critical role in tax calculations, as they are usually deductible from the company's gross income, thereby reducing the taxable income. Charges may or may not be tax-deductible, depending on their nature and the tax laws applicable to the individual or entity incurring the charge.
While both expenses and charges represent outflows of money, they serve different purposes and are treated differently in accounting and tax contexts. Expenses are crucial for understanding a company’s operational efficiency and profitability, whereas charges are specific fees paid for services, goods, or penalties.
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Comparison Chart
Definition
Costs incurred in the operation of earning revenue.
Fees for services or goods received.
Relation to Operations
Directly related to business operations.
May not directly relate to operational activities.
Accounting Treatment
Matched against revenues and recorded over the period they relate to.
Recorded as incurred, can be capitalized or expensed based on nature.
Impact on Profitability
Directly affects net income by reducing gross income.
Impact depends on the nature and treatment of the charge.
Tax Implications
Generally deductible, reducing taxable income.
Deductibility depends on the nature of the charge and tax laws.
Compare with Definitions
Expense
Can be variable or fixed.
Raw material expenses vary with production levels.
Charge
May include penalties or fines.
Late payment charges on overdue invoices increase the cost.
Expense
Costs associated with generating revenue.
Salary expenses for the sales team are crucial for business operations.
Charge
A fee for a specific service or product.
Bank charges for account maintenance are deducted monthly.
Expense
Recorded on the income statement.
Utility expenses are matched against the month they are used in the financial statements.
Charge
Recorded as incurred in accounting records.
Service charges are expensed in the month they occur.
Expense
Outflow of money to pay for operational costs.
Rent expense for office space reduces the company's net income.
Charge
Can be a one-time or recurring fee.
Installation charges for new software are a one-time cost.
Expense
Affects the profitability of a business.
Increasing marketing expenses aimed to boost sales over time.
Charge
Not directly tied to business operations.
Custom duty charges on imported goods.
Expense
Expenditure is an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense.
Charge
Demand (an amount) as a price for a service rendered or goods supplied
He charged me five dollars for the wine
Wedding planners may charge an hourly fee of up to £150
Expense
The cost incurred in or required for something
Conference rooms were equipped at great expense
Book into the best hotel you can find and hang the expense
Charge
Formally accuse (someone) of something, especially an offence under law
They were charged with assault
Expense
Offset (an item of expenditure) as an expense against taxable income
Up to $17,500 in capital expenditures can be expensed in the year they were incurred
Charge
Entrust (someone) with a task as a duty or responsibility
The committee was charged with reshaping the educational system
Expense
Something spent to attain a goal or accomplish a purpose
An expense of time and energy on the project.
Charge
Store electrical energy in (a battery or battery-operated device)
The shaver can be charged up and used while travelling
Expense
A loss for the sake of something gained; a sacrifice
Achieved speed at the expense of accuracy.
Charge
Rush forward in attack
The plan is to charge headlong at the enemy
Expense
An expenditure of money; a cost
An improvement that was well worth the expense.
A trip with all expenses paid.
Charge
Place a heraldic bearing on
A pennant argent, charged with a cross gules
Expense
Charges incurred by an employee in the performance of work
Was reimbursed for her travel expenses.
Charge
A price asked for goods or services
Our standard charge for a letter is £25
Expense
(Informal) Money allotted for payment of such charges.
Charge
An accusation, typically one formally made against a prisoner brought to trial
He appeared in court on a charge of attempted murder
Expense
Something requiring the expenditure of money
Redecorating the house will be a considerable expense.
Charge
Responsibility for the care or control of someone or something
The people in her charge are pupils and not experimental subjects
Expense
(Archaic) The act of expending.
Charge
The property of matter that is responsible for electrical phenomena, existing in a positive or negative form.
Expense
To charge with expenses.
Charge
A quantity of explosive to be detonated in order to fire a gun or similar weapon
Smaller charges, fired on three minute fuses lit by hand
Expense
To write off as an expense.
Charge
A headlong rush forward, typically in attack
A cavalry charge
Expense
A spending or consuming, often a disbursement of funds.
She went to great expense to ensure her children would get the best education.
Buying the car was a big expense, but will be worth it in the long run.
We had a training weekend in New York, at the expense of our company.
Charge
A device or bearing placed on a shield or crest.
Expense
The elimination or consumption of something, sometimes with the notion of loss or damage to the thing eliminated.
Jones reached the final at the expense of Smith, who couldn't beat him.
Charge
To impose a duty, responsibility, or obligation on
Charged him with the task of watching the young swimmers.
Expense
(obsolete) Loss.
Charge
To instruct or urge authoritatively; command
Charged her not to reveal the source of information.
Expense
(transitive) To charge a cost against an expense account; to bill something to the company for which one works.
It should be acceptable to expense a business lunch with a client.
Charge
(Law) To instruct (a jury) about the law, its application, and the weighing of evidence.
Expense
A spending or consuming; disbursement; expenditure.
Husband nature's riches from expense.
Charge
To set or ask (a given amount) as a price
Charges ten dollars for a haircut.
Expense
That which is expended, laid out, or consumed; cost; outlay; charge; - sometimes with the notion of loss or damage to those on whom the expense falls; as, the expenses of war; an expense of time.
Courting popularity at his party's expense.
Charge
To hold financially liable; demand payment from
Charged her for the balance due.
Expense
Loss.
And moan the expense of many a vanished sight.
Charge
To purchase on credit
Paid cash for the stockings but charged the new coat.
Expense
Amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures)
Charge
To load to capacity; fill
Charge a furnace with coal.
Expense
A detriment or sacrifice;
At the expense of
Charge
To load (a gun or other firearm) with a quantity of explosive
Charged the musket with powder.
Expense
Money spent to perform work and usually reimbursed by an employer;
He kept a careful record of his expenses at the meeting
Charge
To pervade or fill, as with a feeling or quality
The atmosphere was charged with tension.
Charge
To make a claim of wrongdoing against; accuse or blame
The prosecutors charged him with car theft. Critics charged the writer with a lack of originality.
Charge
To put the blame for; attribute or impute
Charged the accident to the driver's inexperience.
Charge
To rush against in an attack
The troops charged the enemy line.
Charge
(Basketball) To bump or run into (a defender) illegally while in possession of the ball or having just made a pass or shot.
Charge
(Sports) To bump (an opponent) so as to knock off balance or gain control of the ball, as in soccer.
Charge
(Sports) To body-check (an opponent) illegally, from behind or after taking more than two strides, especially in ice hockey.
Charge
To cause formation of a net electric charge on or in (a conductor, for example).
Charge
To energize (a storage battery) by passing current through it in the direction opposite to discharge.
Charge
To excite; rouse
A speaker who knows how to charge up a crowd.
Charge
To direct or put (a weapon) into position for use; level or direct.
Charge
(Heraldry) To place a charge on (an escutcheon).
Charge
To rush forward in an attack
The dog charged at the intruder.
Charge
To rush forward; run
Children charging around the house.
Charge
To demand or ask payment
Did not charge for the second cup of coffee.
Charge
To make a purchase or purchases on credit.
Charge
(Accounting) To consider or record as a loss. Often used with off.
Charge
To become energized
The battery is still charging.
Charge
Expense; cost
Added to the bill a charge for replacing the thermostat.
Charge
The price asked for something
What's the charge for a new tire?.
Charge
A debt or an entry in an account recording a debt
Are you paying cash or is this a charge?.
Charge
A financial burden, such as a tax or lien.
Charge
A weight or burden; a load
A freighter relieved of its charge of cargo.
Charge
The quantity that a container or apparatus can hold.
Charge
A quantity of explosive to be set off at one time.
Charge
An assigned duty or task; a responsibility
The commission's charge was to determine the facts.
Charge
Care; custody
A child put in my charge.
Charge
Supervision; management
The scientist who had overall charge of the research project.
Charge
One that is entrusted to another's care or management
The baby sitter's three young charges.
Charge
An order, command, or injunction.
Charge
Instruction given by a judge to a jury about the law, its application, and the weighing of evidence.
Charge
A claim of wrongdoing; an accusation
A charge of murder.
Pleaded not guilty to the charges.
Charge
A rushing, forceful attack
Repelled the charge of enemy troops.
The charge of a herd of elephants.
Charge
The command to attack
The bugler sounded the charge.
Charge
The intrinsic property of matter responsible for all electric phenomena, in particular for the electromagnetic force, occurring in two forms arbitrarily designated negative and positive.
Charge
The net measure of this property possessed by a body or contained in a bounded region of space, measured in coulombs, ampere-hours, or units of elementary charge. Also called electric charge.
Charge
See magnetic charge.
Charge
See color charge.
Charge
(Informal) A feeling of pleasant excitement; a thrill
Got a real charge out of the movie.
Charge
(Heraldry) A figure or device represented on the field of an escutcheon.
Charge
The amount of money levied for a service.
There will be a charge of five dollars.
Charge
(military) A ground attack against a prepared enemy.
Charge
A forceful forward movement.
Charge
An accusation.
Charge
An official description (by the police or a court) of a crime that somebody may be guilty of.
Two charges of manslaughter
Charge
An accusation by a person or organization.
That's a slanderous charge of abuse of trust.
Charge
An electric charge.
Charge
The scope of someone's responsibility.
The child was in the nanny's charge.
Charge
Someone or something entrusted to one's care, such as a child to a babysitter or a student to a teacher.
The child was a charge of the nanny.
Charge
A load or burden; cargo.
The ship had a charge of colonists and their belongings.
Charge
An instruction.
I gave him the charge to get the deal closed by the end of the month.
Charge
(basketball) An offensive foul in which the player with the ball moves into a stationary defender.
Charge
(firearms) A measured amount of powder and/or shot in a cartridge.
Charge
(by extension) A measured amount of explosive.
Charge
(heraldry) An image displayed on an escutcheon.
Charge
(weaponry) A position (of a weapon) fitted for attack.
To bring a weapon to the charge
Charge
(farriery) A sort of plaster or ointment.
Charge
(obsolete) Weight; import; value.
Charge
A measure of thirty-six pigs of lead, each pig weighing about seventy pounds; a charre.
Charge
(ecclesiastical) An address given at a church service concluding a visitation.
Charge
To assign a duty or responsibility to.
Charge
(transitive) To assign (a debit) to an account.
Let's charge this to marketing.
Charge
(transitive) To pay on account, as by using a credit card.
Can I charge my purchase to my credit card?
Can I charge this purchase?
Charge
(ambitransitive) To require payment (of) (a price or fee, for goods, services, etc.).
To charge high for goods
I won't charge you for the wheat.
Charge
(dated) To sell at a given price.
To charge coal at $5 per unit
Charge
(law) To formally accuse (a person) of a crime.
I'm charging you with assault and battery.
Charge
To impute or ascribe.
Charge
To call to account; to challenge.
Charge
(transitive) To place a burden, load or responsibility on or in.
Charge
To ornament with or cause to bear.
To charge an architectural member with a moulding
Charge
(heraldry) To assume as a bearing.
He charges three roses.
Charge
(heraldry) To add to or represent on.
He charges his shield with three roses or.
Charge
(transitive) To load equipment with material required for its use, as a firearm with powder, a fire hose with water, a chemical reactor with raw materials.
Charge your weapons; we're moving up.
Charge
(transitive) To cause to take on an electric charge.
Rubbing amber with wool will charge it quickly.
Charge
(transitive) To replenish energy to (a battery, or a device containing a battery) by use of an electrical device plugged into a power outlet.
He charged the battery overnight.
Don't forget to charge the drill.
I charge my phone every night.
Charge
To replenish energy.
The battery is still charging: I can't use it yet.
His cell phone charges very quickly, whereas mine takes forever.
Charge
(intransitive) To move forward quickly and forcefully, particularly in combat and/or on horseback.
Charge
To attack by moving forward quickly in a group.
The impetuous corps charged the enemy lines.
Charge
(basketball) To commit a charging foul.
Charge
To take a few steps down the pitch towards the bowler as they deliver the ball, either to disrupt the length of the delivery, or to get into a better position to hit the ball.
Charge
To lie on the belly and be still. A command given by a hunter to a dog
Charge
To lay on or impose, as a load, tax, or burden; to load; to fill.
A carte that charged was with hay.
The charging of children's memories with rules.
Charge
To lay on or impose, as a task, duty, or trust; to command, instruct, or exhort with authority; to enjoin; to urge earnestly; as, to charge a jury; to charge the clergy of a diocese; to charge an agent.
Moses . . . charged you to love the Lord your God.
Cromwell, I charge thee, fling away ambition.
Charge
To lay on, impose, or make subject to or liable for.
When land shall be charged by any lien.
Charge
To fix or demand as a price; as, he charges two dollars a barrel for apples.
Charge
To place something to the account of as a debt; to debit, as, to charge one with goods. Also, to enter upon the debit side of an account; as, to charge a sum to one.
Charge
To impute or ascribe; to lay to one's charge.
No more accuse thy pen, but charge the crimeOn native sloth and negligence of time.
Charge
To accuse; to make a charge or assertion against (a person or thing); to lay the responsibility (for something said or done) at the door of.
If he did that wrong you charge him with.
Charge
To place within or upon any firearm, piece of apparatus or machinery, the quantity it is intended and fitted to hold or bear; to load; to fill; as, to charge a gun; to charge an electrical machine, etc.
Their battering cannon charged to the mouths.
Charge
To ornament with or cause to bear; as, to charge an architectural member with a molding.
Charge
To assume as a bearing; as, he charges three roses or; to add to or represent on; as, he charges his shield with three roses or.
Charge
To call to account; to challenge.
To charge me to an answer.
Charge
To bear down upon; to rush upon; to attack.
Charged our main battle's front.
Charge
To make an onset or rush; as, to charge with fixed bayonets.
Like your heroes of antiquity, he charges in iron.
"Charge for the guns!" he said.
Charge
To demand a price; as, to charge high for goods.
Charge
To debit on an account; as, to charge for purchases.
Charge
To squat on its belly and be still; - a command given by a sportsman to a dog.
Charge
A load or burder laid upon a person or thing.
Charge
A person or thing commited or intrusted to the care, custody, or management of another; a trust.
Charge
Custody or care of any person, thing, or place; office; responsibility; oversight; obigation; duty.
'Tis a great charge to come under one body's hand.
Charge
Heed; care; anxiety; trouble.
Charge
Harm.
Charge
An order; a mandate or command; an injunction.
The king gave cherge concerning Absalom.
Charge
An address (esp. an earnest or impressive address) containing instruction or exhortation; as, the charge of a judge to a jury; the charge of a bishop to his clergy.
Charge
An accusation of a wrong of offense; allegation; indictment; specification of something alleged.
The charge of confounding very different classes of phenomena.
Charge
Whatever constitutes a burden on property, as rents, taxes, lines, etc.; costs; expense incurred; - usually in the plural.
Charge
The price demanded for a thing or service.
Charge
An entry or a account of that which is due from one party to another; that which is debited in a business transaction; as, a charge in an account book.
Charge
That quantity, as of ammunition, electricity, ore, fuel, etc., which any apparatus, as a gun, battery, furnace, machine, etc., is intended to receive and fitted to hold, or which is actually in it at one time
Charge
The act of rushing upon, or towards, an enemy; a sudden onset or attack, as of troops, esp. cavalry; hence, the signal for attack; as, to sound the charge.
Never, in any other war afore, gave the Romans a hotter charge upon the enemies.
The charge of the light brigade.
Charge
A position (of a weapon) fitted for attack; as, to bring a weapon to the charge.
Charge
A sort of plaster or ointment.
Charge
Thirty-six pigs of lead, each pig weighing about seventy pounds; - called also charre.
Charge
Weight; import; value.
Many suchlike "as's" of great charge.
Charge
(criminal law) a pleading describing some wrong or offense;
He was arrested on a charge of larceny
Charge
The price charged for some article or service;
The admission charge
Charge
An assertion that someone is guilty of a fault or offence;
The newspaper published charges that Jones was guilty of drunken driving
Charge
Request for payment of a debt;
They submitted their charges at the end of each month
Charge
A impetuous rush toward someone or something;
The wrestler's charge carried him past his adversary
The battle began with a cavalry charge
Charge
The quantity of unbalanced electricity in a body (either positive or negative) and construed as an excess or deficiency of electrons;
The battery needed a fresh charge
Charge
Financial liabilities (such as a tax);
The charges against the estate
Charge
A person committed to your care;
The teacher led her charges across the street
Charge
Attention and management implying responsibility for safety;
He is in the care of a bodyguard
Charge
A special assignment that is given to a person or group;
A confidential mission to London
His charge was deliver a message
Charge
A formal statement of a command or injunction to do something;
The judge's charge to the jury
Charge
A quantity of explosive to be set off at one time;
This cartridge has a powder charge of 50 grains
Charge
The swift release of a store of affective force;
They got a great bang out of it
What a boot!
He got a quick rush from injecting heroin
He does it for kicks
Charge
(psychoanalysis) the libidinal energy invested in some idea or person or object;
Freud thought of cathexis as a psychic analog of an electrical charge
Charge
Heraldry consisting of a design or image depicted on a shield
Charge
To make a rush at or sudden attack upon, as in battle;
He saw Jess charging at him with a pitchfork
Charge
Blame for, make a claim of wrongdoing or misbehavior against;
He charged me director with indifference
Charge
Demand payment;
Will I get charged for this service?
We were billed for 4 nights in the hotel, although we stayed only 3 nights
Charge
Move quickly and violently;
The car tore down the street
He came charging into my office
Charge
Assign a duty, responsibility or obligation to;
He was appointed deputy manager
She was charged with supervising the creation of a concordance
Charge
File a formal charge against;
The suspect was charged with murdering his wife
Charge
Make an accusatory claim;
The defense attorney charged that the jurors were biased
Charge
Fill or load to capacity;
Charge the wagon with hay
Charge
Enter a certain amount as a charge;
He charged me $15
Charge
Cause to be admitted; of persons to an institution;
After the second episode, she had to be committed
He was committed to prison
Charge
Give over to another for care or safekeeping;
Consign your baggage
Charge
Pay with a credit card; pay with plastic money; postpone payment by recording a purchase as a debt;
Will you pay cash or charge the purchase?
Charge
Lie down on command, of hunting dogs
Charge
Cause to be agitated, excited, or roused;
The speaker charged up the crowd with his inflammatory remarks
Charge
Place a heraldic bearing on;
Charge all weapons, shields, and banners
Charge
Provide with munition;
He loaded his gun carefully
Charge
Direct into a position for use;
Point a gun
He charged his weapon at me
Charge
Impose a task upon, assign a responsibility to;
He charged her with cleaning up all the files over the weekend
Charge
Instruct (a jury) about the law, its application, and the weighing of evidence
Charge
Instruct or command with authority;
The teacher charged the children to memorize the poem
Charge
Attribute responsibility to;
We blamed the accident on her
The tragedy was charged to her inexperience
Charge
Set or ask for a certain price;
How much do you charge for lunch?
This fellow charges $100 for a massage
Charge
Cause formation of a net electrical charge in or on;
Charge a conductor
Charge
Energize a battery by passing a current through it in the direction opposite to discharge;
I need to charge my car battery
Charge
Saturate;
The room was charged with tension and anxiety
Common Curiosities
Are all charges considered expenses?
Not all charges are considered expenses in accounting; some may be capitalized and not immediately affect the profit and loss statement.
How do expenses affect a company's financial health?
Expenses reduce a company’s gross income, affecting its net income and overall profitability.
What does a charge mean in financial terms?
A charge refers to a fee or cost for services or goods, which can be a one-time fee, recurring payment, or penalty.
What is an expense in accounting?
An expense is a cost incurred by a business in the process of earning revenue, recorded in the financial statements to calculate net income.
Can an expense also be a charge?
Yes, some expenses can be charges, such as utility charges, which are operational costs for services used.
How do businesses record charges?
Businesses record charges as they are incurred, either by expensing them in the period they occur or capitalizing them for future benefit.
Are charges always negative?
While charges represent outflows of money, they are not always negative in context; they can be for beneficial services or goods.
How can businesses manage expenses effectively?
Businesses can manage expenses through budgeting, monitoring operational efficiency, and making strategic decisions to ensure profitability.
Why are expenses important for tax purposes?
Expenses are important for tax purposes because they are generally deductible from gross income, reducing taxable income.
What role do charges play in personal finance?
In personal finance, charges can affect budgeting and financial planning, especially recurring charges or unexpected fees.
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Written by
Maham Liaqat
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
