How to Setup an Expense Code

What is an Expense Code?

An Expense Code is used to map transactions to a specific General Ledger (GL) account.

An Expense Code is required when opening a document with a Type of Sale that is marked as an Internal Type of Sale. The invoice total will be posted to the account listed on the Expense Code rather than Accounts Receivable (AR).

For more information on the difference between Customer Sale Codes and Internal Sale Codes, please reference How to Setup a Sale Code.

1. Navigating to the Expense Code Setup

To create a new Expense Code:

1. Go to Settings > Administration > Expense Codes.

2. Click + Expense Code to open the Expense Code Setup screen.
   

2. Configuring the Expense Code

Fill in the following required fields:

Basic Information

• Branch – Select the branch where this Expense Code will be used.

• Department – Specify the department associated with this Expense Code.

• Expense Code – Enter a unique identifier for the Expense Code.

• Expense Account – Assign the GL Account that transactions linked to this Expense Code should post to.

Click Save to finalize the Expense Code setup.

Example Expense Codes:

Example 1: Equipment Preparation Expense Code

One example of an Expense Code is Equipment Prep which is mapped to the Equipment Inventory Account. This Expense Code allows costs associated with preparing a unit to be recorded towards the units Equipment Inventory Account.

Use Case

When opening an Internal Document using an Expense Code linked to the Equipment Inventory Account that the equipment unit is assigned to, the invoiced amounts from the document will be recorded against that account.

For example, if parts, labor, or other costs are added to an Internal Equipment Prep (EqPrep) document and then invoiced, the total invoice amount will increase the Equipment Inventory Value in the General Ledger (GL), capitalizing those costs into the value of the equipment.

Key Considerations

• On an Internal Equipment Prep Document, the Equipment Unit must be assigned under the Service 1 Tab for the invoice amount to post to the equipment unit.
• Preparation costs (such as parts, labor, or services) are capitalized into the equipment’s inventory value, rather than being recorded as an immediate expense on the income statement.
  
  

Example 2: Building Maintenance Expense Code

Another example of an Expense Code is Building Maintenance, which in this example is mapped to the Facility Maintenance Expense Account. This Expense Code is used to track costs associated with maintaining and repairing the dealership’s buildings and facilities.

Disclaimer

Please consult with your accountant or financial professional to ensure proper configuration and compliance with your organization's financial practices when configuring Expense Codes. Users should verify the suitability of these instructions for their specific needs and consult their system administrator for assistance with unique scenarios.