Which of the following describes expenses?

Expenses are defined as decreases in economic benefits during an accounting period that result in a reduction of equity, except for distributions to equity participants. This definition aligns perfectly with the option selected. When an entity incurs an expense, it often involves either a decrease in assets or an increase in liabilities, which reflects the outflow of resources required to generate revenue or support operations. The result of these transactions is a decrease in equity, highlighting the relationship between expense recognition and its impact on a company's overall financial position.

While royalties paid by the entity are indeed expenses, they represent a specific category rather than a comprehensive definition of expenses. The other options focus on transactions that either increase equity or describe income rather than expenses. Thus, while they may relate to other aspects of financial performance, they do not effectively capture the essence of what constitutes an expense in financial accounting.