Cost classification is the process of grouping expenditures according to common characteristics, facilitating the proper allocation and management of expenses within an organization.
Expenditure refers to the costs or expenses incurred by an organization. These may be capital expenditure or revenue expenditure. It encompasses both the outlay of money and the acknowledgment of liabilities.
A government grant is a financial award provided by a government body to an organization to support activities that are deemed socially or economically beneficial. These grants can be either revenue-based or capital-based and have specific accounting treatments according to Financial Reporting Standards.
Materials represent the production supplies that are acquired by an organization as revenue expenditure from third parties. These are essential for manufacturing final products and are categorized into direct and indirect materials.
The revenue expenditure incurred in maintaining the assets of an organization in their original condition as far as possible. Any expenditure incurred in improving the assets would normally be regarded as capital expenditure and therefore not repairs and maintenance.
Revenue expenditure refers to the costs that are immediately written off to the income statement in the accounting period in which they are incurred. These expenditures are associated with the revenue generated within the same period.
The initial expenditure incurred in the setting up of an operation or project. The start-up costs may include the capital investment costs plus the initial revenue expenditure prior to the start of operations.
