Expense Category

What expense category do groceries come under?

There is no definitive answer to this question, as businesses will have different ways of categorizing their expenses. However, we can provide some guidance on which expense category is most likely to be appropriate for groceries.

Possible Expense Categories for Groceries

There are a few different expense categories that groceries could fall under. The most likely candidates are:

  • Cost of Goods Sold (COGS): This is the cost of the inventory that a business sells. If a business sells food, then the cost of the food that they sell would be classified as COGS. This would include the cost of the groceries that are used to make the food that is sold.
  • Operating Expenses: This is a catch-all category for all the expenses that are related to the day-to-day operations of a business. This would include the cost of groceries that are used for office parties or other events that are held at the business premises.
  • Travel and Entertainment (T&E): This category is for expenses that are incurred while traveling on business or entertaining clients. If a business owner takes a client out to lunch and pays for their meal, that would be classified as a T&E expense. This could also include the cost of groceries if they are used to make meals that are served to clients.

Which Expense Category is Most Appropriate for Groceries?

The most appropriate expense category for groceries will depend on how the groceries are being used. If the groceries are being used to make inventory that is sold, then they would fall under the COGS category. If the groceries are being used for office parties or other events at the business premises, then they would fall under the Operating Expenses category. And if the groceries are being used to make meals that are served to clients, then they would fall under the T&E category.

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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