What expense category is office furniture?

Office furniture is categorized as "Office Equipment" or "Fixed Assets" under expenses. By nature, it's a capital expenditure, delivering lasting value to the company.

Understanding office furniture in accounting

In accounting, office furniture is considered a type of tangible fixed asset. This classification is due to the furniture’s physical attributes and anticipated long-term use. Proper accounting for our office furniture is critical for maintaining accurate financial records and effective asset management.

Is furniture an asset?

Office furniture is considered an asset. To be more specific, it is a fixed asset that appears on the balance sheet. When we at our firm purchase office furniture, we treat it as such and gradually write down its value over time. This process reflects the ongoing value and use of the furniture in our day-to-day operations.

Office furniture categories

Office furniture can be divided into several business expense categories based on its function and usage:

1. Desks and workstations: Essential for employee productivity and organization.
2. Chairs and seating: Includes ergonomic chairs, conference room seating, and guest chairs.
3. Storage solutions: Filing cabinets, bookshelves, and storage units.
4. Conference room furniture: Tables, chairs, and presentation equipment.
5. Reception area furniture: Reception desks, waiting area chairs, and coffee tables.

Accounting for office furniture

When accounting for office furniture, it’s important to consider the concept of depreciation and the appropriate journal entries.

Depreciation: Office furniture is depreciated over its useful life, typically 5 to 10 years, to reflect wear and tear, usage, and obsolescence.

Journal entries: When buying office furniture, debit the fixed asset account and credit either cash or accounts payable. Depreciation cost is debited to the depreciation expense account and credited to accumulated depreciation.

Let Ramp automatically categorize your expenses

Ramp empowers businesses to proactively manage spend on office furniture and gain valuable insights into spending patterns and potential savings opportunities. Regular audits and ongoing management of these assets can lead to a more efficient financial strategy and stronger business outcomes.