Expense Category

What expense category does equipment come under?

There is no easy answer to this question as it depends on the type of equipment and how it is used by the business. However, we have compiled a list of the most likely expense categories that equipment would fall under, to help you make the best decision for your business.

Capital Expenditures

Capital expenditures are usually larger purchases that the business intends to use for a long period of time. This could include items such as machinery, vehicles, or office furniture. These items are usually recorded as assets on the balance sheet.

Operating Expenses

Operating expenses are the costs associated with running the day-to-day operations of the business. This could include items such as office supplies, maintenance contracts, or repairs. These items are usually recorded as expenses on the income statement.

Other Expenses

There are other expenses that could fall under either capital expenditures or operating expenses, depending on the specific item. For example, computer equipment could be considered a capital expenditure if it is long-term and used for business operations, or it could be considered an operating expense if it is leased or rented. The best way to determine which category is best for your business is to speak with your accountant or financial advisor.

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.”
Audrey Carroll
Senior Manager, Accounting, Ramp
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“As we scale we need tools that are built to scale with us - we need to see expenses real time, we need to see duplicate spend. These types of insights are important to the health of our business.”

Steve Padis
SVP Finance & Strategy, Barry's

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