Expense Accounts refer to a type of financial record that mainly stores and organizes the different costs of a business that it generates. The term “accrued” on the other hand refers to the accumulation of expenses in this particular context and is not a type of expense account in itself.

Now that you already know the answer to “which is not an expense account”, I will be discussing in more detail about Expenses that occur in different types of businesses. Keep reading till the end of this article to find out more information on the same!

What Is An Expense Accounts?

These sorts of accounts are temporary and reset back to zero towards the end of an accounting period. Sometimes they are also referred to as “contra equity accounts” and they decrease the stockholder’s equity for a company. 

The expense accounts might include payroll expenses, payments to the different suppliers, amortization, selling expenses, and others. The accountants of different companies subtract these from the total revenue and then calculate the company’s net equity. Let’s see first what are expenses.

Expenses are the costs which business sustains during regular business operations.This sustainable expenses spends money and when you are planning to purchase any goods and other services. Here are some of the expense examples.

• Employed wages and the other benefits.
• Advertising options.
• Other inventory and equipment purchase.
• Rent and utilities
• Travel reimbursement

Expenses are irretrievable for business. But there are different types of expense accounts which you have to know for understanding the answer of which is not an expense account.

Definition and Types Of Expense Accounts

There’s a great deal of importance in understanding the different types of expense accounts and how they affect the revenue of a company. Here is a list of some of the main types of expense accounts:

Fixed Expenses

The Fixed Costs are very frequently referred to as Overhead costs. These remain the same for each of the accounting periods and enforce an easy form of budgeting. These forms of expenses never fluctuate, even with the differing levels of the process of manufacturing. 

Some examples of fixed types of expenses are – payroll, depreciation, rent, and insurance. 

Operating Expenses

These types of expenses are frequently abbreviated as OPEX. They refer to the costs that a business has to incur for generating revenue. This particular type of expense showcases the income statement of the company. 

The operating costs might include insurance payments, advertising, rent, travel expenses, maintenance and repairs, and payroll expenses.

Non-Deductible And Deductible Expenses

These expense accounts mainly determine the tax liability of any given company in a fiscal year. The accountants might reduce the tax liability of a company by actively subtracting the deductible expenses from the total revenue. 

The Non-deductible expenses do not necessarily affect the tax liability of any given business.

Non-Operating Expenses

The Non-Operating expenses mainly refer to the costs that are separate from the business operations (core). The Financial Analysts work to separate the operating from the non-operating expenses on income statements. 

The Non-Operating expenses also include paid interest, losses of foreign exchange, restructuring and relocation expenses, fire damage, and expenses for lawsuit settlements. 

Tip: If you missed out on my answer on “which is not an expense account” then you can go back to give it a read!

Variable Expenses

Variable Expenses refer to the costs which change with the output of the company. These types of expenses can even increase/decrease depending on the no. of services and goods that get produced. 

Some examples of such expenses include – entertainment expenses, raw materials, direct costs of labor, packaging supplies, fees of credit card, and sales commission.

What Really Qualifies As Business Expenses?

Business expenses frequently refer to the deductions that get done from the production incurs of a company. The various accountants measure the costs right within a fixed amount of time and then reflect on the same costs on the statement of income. 

Here is a list of some of the most popular types of expenses that the companies accrue:

Service Fees

These particular fees refer to the amount spent on some form of related services to the service/product purchased. A few examples of service fees that businesses spend on are – insurance, equipment maintenance, business services, bank fees, and interest payments.

Rent

Rent refers to the cost of occupying a location or a property for conducting its business operations. These also include storage, retail, factories, and office spaces.

This form of cost can also be one of the highest forms of accounts for the expense of a retail business. There are also a few companies that have shifted from this to e-commerce as well. 

Development & Training

The development and training expenses popularly refer to the educational activities which get created to improve the operational skills and knowledge of the other employees. 

Providing training to the other employees with instruction and information on their task performance is a form of continuous process so that they get to develop their leadership skills. 

Payroll

Payroll expenses refer to the cost of salaries and wages that get paid to a company’s employees. This form of expense account also often includes the cost of all things related like – health insurance, social security of workers, compensation insurance, payroll taxes, and more. 

This particular type of expense is often costly hence there are a lot of companies that outsource some of the labor to reduce the payroll expenses.

Advertising & Marketing

Marketing here refers to the expenses that incur on the part of a business – when they promote their brand’s offered products and services. 

These expenses help the company in the long run. It helps in generating more reach for the companies and gets word about the brand out there. 

General Expenses

These forms of expenses are incurred daily and are needed for the smooth running of daily business. A few examples of general expenses include licensing fees, software, stationery, and office tools, costs of digital platforms, and more. 

To Wrap It Up!

Expenses are something that is naturally a part of every type of business out there. Businesses earn and also spend at the same – it is a complete cycle where one wouldn’t occur without the other. 

Thank you for reading up till the end of the article. I hope you found the information regarding “which is not an expense account” useful.

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