Cost and expense usually occur at the same time, or at least in the same accounting period. However, there are still many costs that cannot be recognized immediately as an expense.
For most of the companies, the earning process of revenue is very long
1. Recognition at Completion of Earning Process. 2. Recognition Prior to Delivery 3. Recognition After Delivery 4. Recognition by Percentage-of-Completion
7.1 Revenue
7.1.1 Definition of Revenue
The increase in economic resources either through increases to assets or reductions to liabilities.
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Various terms can used to describe different types of revenue
◦ ……
（3）Administrative Expenses
◦ Expenses used to organize and manage production and other business activities.
◦ Administrative expenses should be recorded in the current profits and losses during the occurrence period.
◦ Examples of expenses
Cost of employees’ salaries, advertising, rent, utilities, and depreciation. All these expenses are essential to attract and service customers and thereby earn revenue
（2）Selling Expenses
◦ Definition
Expenses occurred in the process of selling products, semi-finished goods and services.
◦ Examples
packaging expenses borne by the company, transportation expenses advertising expenses insurance expenses commission expenses
◦ Sale Commissions Earned ◦ Commission Revenue ◦ Fees Earned ◦ interest earned
A firm earns revenues as it engages in activities that increase the value or utility of an item or service.
（1）Cost of Goods d
◦ The determination of cost of goods sold involves allocating the total cost of goods available for sale between the cost of goods sold and the cost of the ending inventory.
A company must be very careful to use these two words and try not to misuse.

According to the matching principle, once revenues have been recognized in conformity with the revenue recognition criteria for any reporting period, expenses occurred in generating these revenues should also be recognized in the same period.
◦ Both selling expenses and administrative expenses are period
（4）Depreciation Expenses
◦ Depreciation is the term for allocating any fixed asset’s cost to the periods of its use or benefits, regardless of the type of assets.
7.2.1 Definition of Expense
◦ Generally speaking, expense is the expenditure that is charged against revenue. Specifically, expense is the decrease in economic resources resulting from reductions of assets or occurrence of liabilities.
◦ Depreciation expenses should be recognized in a rational and systematic manner appropriate to the nature of the fixed asset.