Recording Expenses

Recording expenses is one of the basic bookkeeping tasks that you will have to master as a new small business owner.

How to Record Your Expenditure

Before we start, download and print this expenditure record form.

Every time you purchase something for your business or pay an account you should record the transaction on your expenditure record form. Start by writing the date of the transaction in the date column.

Enter a descriptor for the transaction in the details column. The descriptor should enable you to recognize the transaction, it would normally be the name of the company or the individual you made the payment to.

The column labeled REF is to record a reference for the transaction. It tends to be a throw-back to the days when most purchases were made using checks and was used to record the check number.

In these days of electronic transactions, the column is typically used to record the method of payment (eg CASH when paying in cash, C/C for credit cards or D/C for debit card transactions).

You enter the total amount of the transaction in the Total Amount column. The next step is to allocate the expenditure to one or more of your expenditure categories. If you have purchased goods that relate to more than one category, you should split the payment across those categories. For example if you buy $50 of office supplies and a $100 pre-paid phone card in the same transaction, you would enter $150 into the total amount column, $50 in the office supplies column and $100 in either a column for telephone expenses or the sundries column.

The seventh expense category columns (including the sundries column) should total to the same amount that you have entered into the total amount column.

You will notice that the labels for the first four expenditure column have been left blank. This is to enable you to select the most appropriate expense accounts from your chart of accounts. Select accounts that are used fairly often, that way when you or your bookkeeper is entering your expenditure data into your electronic bookkeeping system you can enter a total for that expense rather than each individual transaction.

The sundries column is used to record transactions that do not fit within one of the other columns.

What's Next?

Now that you know how to go about recording expenses, you might like to check out some other basic bookkeeping tasks.

• Recording your petty cash transactions,
• Recording your sales,
• Managing your asset records,
• Doing a Bank Reconciliation,
• Tracking your customers accounts, and
• Tracking your creditor accounts.

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