Expense Tracking Documentation
To chart the accounts for Expense Tracking, similar to how income and invoicing are handled, we need to focus on categorizing expenses into specific accounts and tracking payments. Here`s an example of how the chart of accounts for expense tracking could be structured:
Account Code | Account Name | Account Type | Description |
---|---|---|---|
5000 | Office Supplies | Expense | Costs for stationery, paper, and office materials. |
5100 | Software Subscriptions | Expense | Costs for SaaS tools, software licenses, etc. |
5200 | Employee Expenses | Expense | Reimbursable expenses incurred by employees. |
5300 | Marketing Expenses | Expense | Advertising, PR, and promotional activities. |
5400 | Travel Expenses | Expense | Business travel, accommodation, and related expenses. |
6000 | Accounts Payable | Liability | Amounts owed to suppliers for services/products. |
1000 | Cash/Bank | Asset | Cash in hand or bank balances. |
Example Transaction Flow: Tracking Software Subscription Expenses
Step 1: Recording a New Software Subscription Expense
Your startup purchases a monthly software subscription (e.g., for $500).
Account | Debit | Credit |
---|---|---|
Software Subscriptions (5100) | $500 | |
Accounts Payable (6000) | $500 |
Step 2: Paying the Software Subscription Invoice
You pay the $500 software subscription invoice from your bank account.
Account | Debit | Credit |
---|---|---|
Accounts Payable (6000) | $500 | |
Cash/Bank (1000) | $500 |
Summary of Expense Tracking Workflow:
- Record the Expense: Debit the specific expense category (e.g., Software Subscriptions) and credit Accounts Payable to reflect the pending liability.
- Pay the Expense: Debit Accounts Payable and credit Cash/Bank to close the liability and reflect the payment.