Expense coding

I have a client with expenses he charged traveling to take an exam related to the business he does. Basically it’s continuing education for the services he provides. The charges are for lodging, meals, and tolls. Would I code these each to the respective travel account (lodging, meals & auto) OR would I code these to Licenses/Exams (separate account we created)? Does it matter? I’ve been getting conflicting information.

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  1. 74 Answers

    Hi there, this can be a bit confusing as there are no direct rules or guidelines provided in accounting standards or the IRS on how individual transactions are recorded. The recording of transactions is subjective in most cases with the exceptions of specific categories like Research and development. When considering which G/L account to code an expense to, what you should do is contemplate if the client is audited, do you have the supporting documents to confirm what the expenses were for, and can defend your rationale for coding the expense to that specific GL account.

    In this case, the travel, lodging, and auto were directly related to the continuing education, so your client could actually create an invoice to bill the company for this expense reimbursement for continuing education. The invoice would include the cost of the course, travel, meals, and lodging on one form with the receipts available if needed. The entire invoice can be coded to continuing education. Recording the expenses this way keeps everything in one GL account and can easily be traced and documented if needed.

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