Expenses are defined as day-to-day costs incurred in running a business, such as office supplies and wages. Capital expenditures involve larger investments in the business, like building or machinery, which will produce future benefits over an extended period of time. Expenses should be reported on the income statement whereas capital expenditures should be reported on the balance sheet. While both involve necessary financial outlays, expenses are generally more immediate and can extend over a shorter timeframe than capital expenditures.