Expense accounts are accounting accounts destined to the recording of all the elements that have to do with purchases or other types of expenses.
Under a more practical definition, expense accounts are numbers or names that are assigned to certain operations of the company to account for them and make a record. For example, a famous expense account is the "merchandise" account. Imagine a shoe company that buys $ 200 worth of shoes. Those $ 200 would be added to the expense account. At the same time, if you pay immediately, those $ 200 would come out of the box.Accounting accounts
Continuing with another example, we will also cite the account of ‘wages and salaries’. Companies need to pay their employees. When you pay the money to your employees, it is added to that account as an expense, while the money also comes out of the box.
A case in which money would not come out of the box immediately, would be the case in which the same shoe company, left the 200 dollars pending payment. In that case, it would not be accounted for as an expense, but as "short-term creditors" or simply "suppliers" which is a liability account.
Expense accounts are always added to the income statement. Therefore, everything that does not involve an expense or a loss is not accounted for. This would be the case with the previous debt.
Main expense accounts
We will divide the main expense accounts into three items: operating expenses, financial expenses and exceptional expenses.
- Variation of existences
- External services
- Personal expenses
- Other expenses
- Interest on obligations
- Debt interest
- Losses from valuation of financial instruments at fair value
- Interest for discounted bills
- Losses in participation and debt securities
- Negative exchange differences
- Losses from intangible assets
- Losses from property, plant and equipment
- Exceptional expenses
- Losses from non-current assets and exceptional expenses
Accounting treatment of expense accounts
Expenses are always posted to credit. That is, they are charged to the account.Income accounts Administrative expenses
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