Expense Report

Definition

An Expense Report is a detailed and itemized document that lists expenses incurred by an employee, usually a salesperson or executive, in the course of performing their job duties. The report includes categories such as transportation, lodging, meals while away from home, and client entertainment. Employees submit these reports to their employers to obtain reimbursement for out-of-pocket expenses.

Examples

Example 1: Salesperson Expense Report

A salesperson on a three-day business trip to Los Angeles submits an expense report that includes the following:

Transportation: Plane tickets ($400), local taxi fares ($50)
Lodging: Hotel accommodation for three nights ($450)
Meals: Breakfast ($30), lunch ($60), dinner ($90)
Client Entertainment: Dinner with a client ($120)
Miscellaneous: Conference fees ($100)

Example 2: Executive’s Monthly Report

An executive submits a monthly expense report that includes:

Transportation: Monthly car rental ($300)
Lodging: Hotel stay for a business trip to New York ($600)
Meals: Weekly business lunch meetings ($200)
Client Entertainment: Golf outing with key clients ($250)
Office Supplies: Printer ink, paper ($50)

Frequently Asked Questions (FAQs)

What should be included in an expense report?

An expense report should include date, type of expense, brief description, amount, and the associated business purpose. Receipts should also be attached when possible.

How often should expense reports be submitted?

The submission frequency can vary by organization. Some companies require weekly, bi-weekly, or monthly submissions, while others may have guidelines based on business trips or project completion.

Can personal expenses be included in an expense report?

No, personal expenses should not be included. Only business-related expenses eligible for reimbursement are permitted.

What happens if an expense report has an error?

It’s important to review expense reports for accuracy before submission. If an error is found, most organizations have a process for correcting and resubmitting the report.

Are there limits on how much can be reimbursed?

Yes, many companies have policies outlining maximum reimbursement limits for certain types of expenses. Employees should consult these policies before incurring costs.

Per Diem: A fixed daily allowance paid by employers to cover an employee’s lodging, meals, and incidental expenses while traveling.
Reimbursement: The act of compensating someone for an outlay of funds, especially after proof of expenses is provided.
Corporate Credit Card: A credit card issued to employees to pay for business-related expenses, which is typically paid by the employer.
Receipt: A document acknowledging that payment has been made, often required to substantiate expenses on an expense report.

Online Resources

Suggested Books for Further Studies

Expense Management for Dummies by Pamela A. Kulwin
Mastering Business Expense Management: Cutting Costs and Increasing Value by Steven M. Bragg
The Complete Guide to Expense Management by Michael R. Lewis
Audit and Assurance Services: An Integrated Approach by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley (For in-depth understanding of accounting, including expense management)

Fundamentals of Expense Report: Business Administration Basics Quiz

### What is typically the first step in creating an expense report? - [x] Collecting and organizing receipts - [ ] Estimating expected expenses - [ ] Submitting a draft to a supervisor - [ ] Preparing for an audit > **Explanation:** The first step in creating an expense report is collecting and organizing receipts. This helps ensure that all expenses are documented and can be accurately reported. ### What type of expenses is NOT usually included in an expense report? - [ ] Lodging - [x] Personal expenses - [ ] Transportation - [ ] Meals away from home > **Explanation:** Personal expenses should not be included in an expense report. Only business-related expenses are eligible for reimbursement. ### For which purpose is an expense report typically NOT used? - [ ] Reimbursement - [ ] Financial auditing - [x] Discussing client business strategies - [ ] Budget planning > **Explanation:** An expense report is not used for discussing client business strategies. It is used primarily for reimbursement, financial auditing, and budget planning. ### How often should receipts be collected for an expense report? - [ ] Once a year - [x] Each time an expense is incurred - [ ] Only for major expenses - [ ] Only when requested > **Explanation:** Receipts should be collected each time an expense is incurred to ensure accurate record-keeping and substantiation of the expenses. ### What information is NOT normally found on an expense report? - [ ] Date of the expense - [ ] Description of the expense - [ ] Amount spent - [x] Employee's personal opinion on the expense > **Explanation:** An employee's personal opinion on the expense is not included in an expense report. The report should be factual, detailing dates, descriptions, and amounts. ### Who typically reviews and approves an expense report? - [x] The employee's supervisor or accounting department - [ ] The employee's family members - [ ] The local municipality - [ ] Fellow employees > **Explanation:** An expense report is typically reviewed and approved by the employee's supervisor or accounting department to ensure accuracy and eligibility for reimbursement. ### What is meant by “per diem”? - [ ] A tax regulation for businesses - [x] A daily allowance for expenses - [ ] A type of corporate credit card - [ ] An annual budget review > **Explanation:** "Per diem" refers to a daily allowance provided by employers to cover an employee's lodging, meals, and incidental expenses while traveling. ### In what format should receipts ideally be attached to an expense report? - [ ] Verbal description - [x] Physical or digital copies - [ ] Handwritten summaries - [ ] Employees' personal photos > **Explanation:** Receipts should ideally be attached as physical or digital copies to substantiate the expenses reported. ### What might an organization do if an employee frequently submits late expense reports? - [ ] Ignore the issue - [ ] Increase the employee's workload - [ ] Provide a bonus for filing late - [x] Implement stricter submission deadlines > **Explanation:** An organization might implement stricter submission deadlines or other controls to address frequent late submissions of expense reports. ### Why is it important for an expense report to align with company policies? - [ ] To ensure employee satisfaction - [ ] To prepare for future projects - [x] To ensure compliance and proper reimbursement - [ ] To create internal competitions > **Explanation:** Ensuring that an expense report aligns with company policies is vital for compliance and proper reimbursement. This helps in maintaining financial integrity and consistency within the organization.

Thank you for diving deeper into the structure and importance of Expense Reports with our detailed articles and quizzes! Keep honing your skills in business administration and financial management.