cost

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Cost

The opposite of revenue. An expense that reflects the price of purchasing goods, services and financial instruments. A cash cost means that cash is given up today to the purchase. Also, the purchase price of an investment, which is compared to the sale proceeds to determine capital gain or loss.

Cost

The amount of money or property paid for a good or service. Cost is an expense for both personal and business assets. If a cost is for a business expense, it may be tax deductible. A cost may be paid immediately in the form of cash or over time in a credit sale or similar transaction. Cost is the opposite of revenue: It may be thought of as money spent instead of made.

cost

The expenditure of funds or use of property to acquire or produce a product or service. See also average cost, fixed cost, historical cost, marginal cost, replacement cost, variable cost.

cost

the expenditure upon resources incurred by a firm in producing and selling its output. Each cost is a charge against revenues and profits for the use or consumption of resources during a trading period. (see PROFIT AND LOSS ACCOUNT). Costs can be classified along functional lines, distinguishing between production, selling, distribution, administration and financing costs. Alternatively costs can be classified as either direct costs (usually raw materials and direct labour) or indirect costs (overheads) (see PROFIT AND LOSS ACCOUNT). Costs may also be classified as variable costs and fixed costs, depending on whether they vary with the level of output or activity. In addition, costs may be analysed by product. Finally costs may be classified by location (division, subsidiary, company, department, etc.).

Classification and analysis of costs is necessary for three main business purposes:

  1. for product costing;
  2. for management control;
  3. for decision-making.

Identification and classification of these costs is the core of MANAGEMENT ACCOUNTING. Fig. 28 shows the build up of major cost elements. See PRODUCTION COST, SELLING COST.

cost

the payments (both EXPLICIT COSTS and IMPLICIT COSTS) incurred by a firm in producing its output. See TOTAL COST, AVERAGE COST, MARGINAL COST, PRODUCTION COST, SELLING COST.

Cost

Cash and/or the value of property given to acquire the property received.
References in periodicals archive ?
First, it applies only to costs to create intangibles, and is inapplicable to any costs incurred to acquire an intangible.
99-23 addresses only the applicability of section 195 to costs incurred in connection with a new trade or business unrelated to the taxpayer's existing business, many read the ruling as establishing a general capitalization principle distinguishing between deductible investigatory costs and capitalizable acquisition costs.
Generally, the total portion of the section 481(a) adjustment relating to costs incurred after December 31, 1986, is brought into the calculation of taxable income in the tax year of change.
If the takeover is perceived as an attack on the corporation's policies, expenses incident to defending those policies would be akin to costs incurred in corporate proxy fights.(35) Several courts have found corporate proxy expenses to be deductible when incurred in defense of corporate policy.(36) The IRS has also assented to the deductibility of such expenses.(37) (The "fiduciary duty" argument might also give the same results.) Deductibility of takeover defense costs is not inconsistent with the Tax Court's long-term benefit test since the expenditures would not give rise to enhanced future earnings or any other long-term benefit.
The legislative history of this provision compared deductible business expansion costs incurred in an ongoing trade or business to costs incurred to enter a new trade or business, which were not deductible under Sec.
In Letter Ruling (TAM) 9315004, the Service reached the same conclusion with respect to costs incurred in response to legal actions to remediate PCB-contaminated soil resulting from the prior use of the taxpayer's equipment.