Therefore, the travelling expenses GL is used as a debit to record the travel expenses in general. For example, if the GL relates to telephone expenses, it shall not fall into conveyance expenses. The GL Description shall depict the nature of the Account. There are no rules for the Naming of an Account. To Bank A/c 4) Travelling expenses are debited to which GL account? Paid for travelling expenses journal entry is Real Account – Debit what comes in and Credit what goes out Nominal Account: Debit the expenses and Losses Credit the gains and incomes and The Golden rules of accounting applicable in this scenario are below. Travelling Expenses is a Nominal A/c – Expenditure and Bank Account is Real A/c – Asset Let’s see the nature of accounts and accounting rules applicable.Īccounts Involved – Travelling expense and Bank Account Paid for Travelling expenses journal entry records the cash/bank payment done for the travel and related expenses incurred for the business purpose. 3) Paid for travelling expenses journal entry: So, emphasis shall be given to business importance of the expenses. The thumb rule here is to check whether the accommodation expenses shall be relatable to the business operations. Therefore, it qualifies for indirect business expenditure. So, these Accommodation expenses are part of travel expenses. These expenses include the Food, Laundry Service, Telephone, Internet expenses, GST and Service Charges. 2) What does Accommodation expenses mean?Īccommodation Expenses are the expenses relating to hotel or motel stay. Therefore, it depends on the business category in which the entity operates. That’s because those expenditures drive the business operations of the entity.įor Entities not falling into the above category, those travel expenses fall into the Marketing Expenses category, which is an indirect expense. The category of expenses depends on the nature of the entity’s business.įor Entities exclusively into the Marketing/Product Sales (not manufacturing), the Travel expense of a Salesman is a direct expense. (Being the travel charges incurred for ABC Manufacturing deal)įrequently Asked Questions 1) Are the Travelling expenses of a Salesman forms part of Direct or Indirect Expenses? Journal Entry for recording the Travelling expenses: So, the Credit, in this case, is the Cash A/c. These expenditures are paid immediately, and there might not be any bills or invoices. There might be instances where there is no requirement to recognize the liability like Meals, tips, parking fees etc. Here Liability Account is named Cab Charges Payable, Travel Charges Payable etc., based on the nature of the liability. Let’s see what’s the corresponding Credit.Ĭredit is for the Liability Account. As this GL is an expenditure Account, the appropriate accounting treatment is to debit this GL Account in the Journal Entry. Travelling expenses is a Nominal Account that flows into the Profit and Loss A/c. Parking Fees, Toll Charges, Cab Waiting Charges and Luggage Porter Charges What’s the Journal Entry?.Tips or Surcharge paid for using any of the above facilities as part of travel.Expenses incurred for the Meals, Communication charges and WIFI Charges.
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