Accounting TERMINOLOGY BULLETINS
Prepared by Committee on Terminology
American Institute of Certified Public Accountants, 270 Madison Avenue, New York 16, N. Y.
Cost, Expense and Loss
1. In Accounting Terminology Bulletin No. 2 the terms proceeds, revenue, income, profit, and earnings were defined. This bulletin de-fines the correlative terms cost, expense, and loss. While ascertain-ment of cost sometimes involves processes of valuation and alloca-tion, the techniques of ascertainment are not discussed here.
2. Cost is the amount, measured in money, of cash expended or other property transferred, capital stock issued, serv-ices performed, or a liability incurred, in consideration of goods or services received or to be received. Costs can be classified as unexpired or expired. Unexpired costs (assets) are those which are applicable to the production of future revenues. Examples of such unexpired costs are inventories, prepaid expenses, plant, investments, and de-ferred charges. Expired costs are those which are not applicable to the production of future revenues, and for
DEFINITIONS AND RECOMMENDATIONS