Expense Category
Human Resources

What expense category do bonuses come under?

This is a difficult question to answer definitively because it depends on the specifics of the situation. However, there are a few general categories that bonuses could fall under.

Compensation Expense

One possibility is that bonuses are a form of compensation expense. This would make sense if the bonuses are given to employees in recognition of their work or performance. In this case, the bonuses would be considered a part of the employee's compensation and would be reported as such on the company's financial statements.

Other Operating Expenses

Another possibility is that bonuses are considered other operating expenses. This would be more likely if the bonuses are given for reasons other than employee performance, such as for meeting sales targets or for completing a project on time and under budget. In this case, the bonuses would be reported as other operating expenses on the company's financial statements.

In conclusion, it is difficult to say definitively which expense category bonuses come under. It depends on the specifics of the situation. However, the two most likely possibilities are compensation expense and other operating expenses.

The information provided in this article does not constitute legal or financial advice and is for general informational purposes only. Please check with an attorney or financial advisor to obtain advice with respect to the content of this article.
“Accurate classification of expenses is vital for businesses as it forms the backbone of financial reporting, tax compliance, and strategic decision-making. It enables businesses to track and analyze their spending patterns, identify cost-saving opportunities, and assess the profitability of various operations or projects. Having a single source to turn to for accounting classification suggestions, such as the Ramp Expense Classifier tool, is immensely helpful as it provides consistency, reduces ambiguity, and streamlines the expense classification process.”
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Senior Manager, Accounting, Ramp
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