Expense Accounting and Reporting: Meaning and Need

Expense Accounting and Reporting: Meaning and Need

An expense report is a form used for tracking business spending, receipt capture, reimbursements. It is the record of every small purchase or expense made required to operate a business, i.e., business spending. It can be for parking, repairs, meals, airlines, rent, fuel, hotels, reimbursement, etc., classified in different expense categories.

How to create an Expense Report?

It can be prepared using a template customized with your company name. Standard columns of an expense report are as follows:

  • Date of the expense incurred
  • Vendor from where an item was purchased
  • Client for whom the expense was incurred
  • Project details for which the expenditure incurred or item purchased
  • The account name of the client in the company’s books
  • The author who incurred the expense or bought the item
  • Notes to explain the expense and amount to represent the cost of the expense.

Need for Expense Accounting

  • Expense reports make your business more tax-efficient and avoid compliance risk.

With an expense report, you are prepared for tax returns appropriately. There are many expenses that can help you to reduce the taxable amount as businesses can claim some expenses as deductions.
Expense deductions are available for businesses by expense categories, like insurance, interest, advertising, mortgage, transport expenses, employee benefit programs, office expenses, pensions, rent or lease, repairs and maintenance, licenses, travel, meals, utilities, wages, and salaries.
Your expense report columns should consist of common and regular expenses in your company. For example, ‘travel and meals’ column if your business meetings with clients are held on a coffee or dinner table. ‘Car and truck expenses’ column if the vehicle is used for business purposes.

  • Employee’s Expense Report for reimbursements

Employees need to submit expense reports for their reimbursable expenses along with attached receipts. It will be checked for the accuracy of expenses.

  • Expense reports are required for insights into business spendings.

Expense reports help a bookkeeper to review their total expenses for a financial year. It helps companies to analyse if employees are spending a lot of money in cash.

Automated Process by Accounting Software

Expense reports to be prepared from scratch can be time taking. Manually you need to search for a template as per your business and customize it with your company details. Edit the columns that reflect common expenditures in your business. Add category-wise itemized expenses to ensure accurate tracking. Compute the total. Attaching and managing associated receipts is one of the cumbersome tasks.
 
Most businesses have moved to automated expense reporting process that helps to:

  • Enforce spending policies easily
  • Consolidate your spending data
  • Gain visibility to spendings quickly
  • Make more effective data-driven decisions for the benefit of your business

For effective expense reports, you can utilize BFAG CPA solutions.
BFAG (Boston Financial Advisory Group) provides the best accounting and financial services. We have a team of experienced professionals who can help you in maintaining your books of accounts.
So, get in touch with us to avail our services.
Contact us in case of any assistance or queries.

Contact us:
info@bostonfagroup.com / sales@bostonfagroup.com
USA: +1 6099377291
Bangalore: +91 80 2572 4800
Pune: +91 7420061235

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