Expense account somehow landed on liability side, since it has been used it can’t be deleted so I made it inactive. For some reason new expense entries located on Profit & Loss side are still being allocated to the same inactive account. What I’m doing wrong? Thanks
Thanks everyone, solved thanks to Tut and his advice.
What advice are you referring to? I did not respond to your post.
It was advice given to one of the members in the forum that showed up in my search.
It was about searching for a residue entry in one of the accounts.
My entries from the invoices created are going to Accounts Receivable and Gst Payable accounts
and for the expenses Gst Receivable (input tax credit) account and now because the system automatically creates “expenses claim” in the liabilities account all my expense claims have been allocated there.
Last night I played with creating new business as well as checking my old ones back to 2006, to see why “expense claim” keeps popping up as liabilities in the chart of accounts setup.
Still not sure why “expense claim” is allocated there at all, because expense is not a liability account.
I’m thinking of sending Lubos an email
Anyway, thanks
Your advice was given to the member tj072
On the contrary, an expense claim most definitely is a liability, because the business owes the person who paid for the expense on its behalf. In an expense claim transaction, the credit goes to the expense claim liability account and the debit goes to an expense account.
Thanks, when you put it that way it makes sense.
However, what also makes sense to me is for e.g. an expense for purchase of fuel would be recorded as:
Debit - because purchase increase the “fuel expenses” account (cost to the business)
Credit - decreases the Bank or Cash account by the amount of the expense (assets accounts)
Anyhow, I did learn something out of it so thanks again.
The only difference for an expense claim is where the credit is posted. It cannot post to a cash or bank account because the business did not spend its own money. Reimbursing the expense claim transfers the credit to the cash or bank account in a separate transaction. Likewise the credit could be transferred to a capital account instead of issuing reimbursement.
Thanks, I have been following on that last night and you are spot on because AASB’s Framework defines expense as ‘decrease in economic benefits during the accounting period in the form of outflows or depletions of assets’
So expense could be regarded as a consumed benefit, whereas an asset continues to have remaining benefits that have not yet been consumed. Consequently, expense can’t be an asset. In my example petrol purchase would be consumed within one accounting period.
Thanks for helping me to realise that I was looking in the wrong direction.