in accounting, expense has a very specific meaning. it is an outflow of cash or other valuable assets from a person or company to another person or company. this outflow of cash is generally one side of a trade for products or services that have equal or better current or future value to the buyer than to the seller. technically, an expense is an event in which an asset is used up or a liability is incurred. in terms of the accounting equation, expenses reduce owners' equity. the international accounting standards board defines expenses as: