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Expenses are listed on the "Asset" side because the expenses effect Revenue (or income). Because Income is an Owners Equity account and is increased with a credit, expenses must be listed in the debit column. Also remember the accounting equation;
Assets = Liabilities + Owners Equity (Stockholders Equity)
The short answer, you want to deduct all your expenses from your equity (revenue account), the only way you can do that is to list expenses on the asset side, if you listed them in liabilities you would have to "Add" the to your revenue (equity account) and you would not get an accurate Revenue amount.
When you pay an expense you credit the amount of cash at the same time you debit the expense. When closing out your accounts you can then list expenses on the income statement and it will decrease revenue because Assets - Owners Equity = Liabilities. This is true with all expenses, not just Miscellaneous. Basically, it keeps the accounting equation in balance.
What else can I help you with?
Are prepaid expenses a liability?
No. They are listed as a debit on the asset side of the Balance Sheet.
Which type of account is prepaid expenses?
Prepaid expense is personal account in nature and default normal balance is debit balance and shown under current asset in asset side of balance sheet.
How are the provisions for doubtful debts treated in the final accounts?
The debts are treated as expenses in the profit and loss account, being entered on the debit side of the income statement coloums.
What is cash on a balance sheet?
Cash is most liquid item in asset side of balance sheet and cash is that amount which is in hand for use for expenses of business.
How do you treate preliminary expenses?
Preliminary expenses are those expenses which incurred before start of actual operations so these are assets of business and shown in asset side of balance sheet as other assets and then amortized over period of time through income statement.
What kind of asset preliminary expenses?
Preliminary expenses are expenses prior to start of operating activity and shown in assets side as an other assets.
Are prepaid expenses a liability?
No. They are listed as a debit on the asset side of the Balance Sheet.
Is share asset or liability?
Share is treated as liability. It is not treated as asset. shares is called as share capital. capital is entered in the liabilities side of the balance sheet.
Which type of account is prepaid expenses?
Prepaid expense is personal account in nature and default normal balance is debit balance and shown under current asset in asset side of balance sheet.
How are the provisions for doubtful debts treated in the final accounts?
The debts are treated as expenses in the profit and loss account, being entered on the debit side of the income statement coloums.
What is cash on a balance sheet?
Cash is most liquid item in asset side of balance sheet and cash is that amount which is in hand for use for expenses of business.
How do you treate preliminary expenses?
Preliminary expenses are those expenses which incurred before start of actual operations so these are assets of business and shown in asset side of balance sheet as other assets and then amortized over period of time through income statement.
Where in Chart of Accounts do you enter Prelinimary expenses ie liability asset etc?
Preliminary expense are those expense which incurred before start of operating activity so it is called other assets and shown in asset side of balance sheet.
If a company uses the Section 179 rule to expense a fixed asset is it still reported as a fixed asset on the balance sheet?
No . If an assest is expensed it will only flow thru the PnL or Income Statement and not be recorded on the Balance sheet as an asset. That is generic treatment of expensing. In a capitalisation approach the asset will appear on the Balance sheet and annual depreciaiton expenses will be reflected on the PnL ( income statement). The Balance sheet will show the Accumulated depriciation on the liabilities side of the balance sheet and Net value ( ie Asset value less less depreciation amount) on the Asset side of the Balance sheet No . If an assest is expensed it will only flow thru the PnL or Income Statement and not be recorded on the Balance sheet as an asset. That is generic treatment of expensing. In a capitalisation approach the asset will appear on the Balance sheet and annual depreciaiton expenses will be reflected on the PnL ( income statement). The Balance sheet will show the Accumulated depriciation on the liabilities side of the balance sheet and Net value ( ie Asset value less less depreciation amount) on the Asset side of the Balance sheet
is capital considered owners equity or an asset?
Capital is the amount contributed by company's owners toward company that's why it is a liability of company to payback on occasion of dissolution that;s why it is treated as owner's equity and comes under liability side of balance sheet and not as an asset of company.
Is a cash account an asset or expense?
An expense account is for wages, motor expenses, stationery etc. Expenses are what you use to be able to run your business, the same as assets. But expenses are revenue expenditure items as mentioned above, and assets like motor vehicle and machinery are classed as capital expenditure. So no an expense account is not an asset account, even though they are both recorded on the debit side of there accounts and both recorded in the general/main ledger. Expenses are recorded in the profit and loss account and assets in the balance sheet. Expenses well a majority are allowable for tax purposes and assets are claimable through capital allowances. So assets are used in the business to generate capital and expenses are deducted from gross profit leaving a net/loss profit.
Where does supplies go in the income statement?
Supplies inventory is a part of balance sheet asset side while when those supplies used then those are supplies expenses which shows in income statement in profit and loss section.
