ANNUAL EXPENSE Meaning and
Definition
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An annual expense refers to a recurring financial cost incurred by an individual, organization, or business over a one-year period. It is a regular outgoing payment that must be made to maintain operations or meet financial obligations throughout a specific financial cycle. Annual expenses typically occur on a yearly basis and are anticipated and planned for in budgeting and financial forecasting.
Common examples of annual expenses include rent or mortgage payments, insurance premiums, property taxes, subscriptions to services or publications, salaries and benefits for employees, professional fees, and maintenance costs. These expenses are necessary for the ongoing functioning of an entity and are typically expected to be paid at fixed intervals throughout the year.
Calculating and tracking annual expenses is a crucial aspect of financial planning and management. It enables individuals or organizations to allocate funds appropriately, manage cash flow effectively, and ensure that adequate reserves are available to cover these expenses as they occur. Annual expenses are often a significant part of a budget, and their accurate assessment and control are essential to sustain financial stability and smooth operations.
Monitoring changes in annual expenses over time can provide valuable insights into an entity's financial health and allow for adjustments to be made so as to avoid over-extension or financial strain. Consequently, understanding and managing annual expenses is crucial for individuals and organizations to maintain financial stability and achieve long-term financial goals.
Common Misspellings for ANNUAL EXPENSE
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Etymology of ANNUAL EXPENSE
The word "annual" originated from the Latin word "annuus" meaning "yearly" or "annual". It was derived from the Latin word "annus" meaning "year".
The term "expense" comes from the Latin word "expensa" which translates to "expenditure" or "disbursement". It was derived from the Latin verb "expēnsus", which means "to pay out" or "to weigh out money".
Combining the two roots, "annual expense" refers to a cost or expenditure that occurs on a yearly basis. It typically denotes recurring expenses that need to be budgeted for each year.
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