Fixed Asset Vs Expense - oboloo (2024)

Fixed Assets and Expenses are two very different concepts that have definitive impacts on a business’s bottom line. Fixed assets are items of monetary value that have been purchased by the company for use over a longer period of time, generally exceeding one year. These items can include buildings, vehicles, computers and anything else of value that is not considered inventory.

On the other hand, expenses are expenses related to the day-to-day operations of the business and are intended to last for only a short amount of time or to be used up quickly, such as office supplies or meals. Over time, these expenditures may add up but they do so much more quickly than fixed assets, which can appreciate in value.

The key difference between a fixed asset and an expense is that expenses are costs incurred immediately while fixed assets are long-term investments in the success of the company. Knowing and understanding this distinction is vital for any company that wants to maximize its profits and minimize its losses.