An Expense Account is a type of account in accounting used to record all costs and expenditures incurred by a business during its operations.
An Expense Account is part of the income statement (profit and loss account) and tracks the money spent by a business to generate revenue. These accounts help in monitoring costs, controlling spending, and calculating profit.
Common types of expense accounts include:
Expense accounts are debited when expenses increase and are closed at the end of the accounting period by transferring their balances to the profit and loss account.
Proper management of expense accounts helps businesses improve efficiency, reduce unnecessary costs, and increase profitability.
"If a company pays ₹20,000 for office rent, it records this amount under the “Rent Expense Account” in its books."