What expense category does a service contract come under?
Audrey Carroll, Senior Manager, Accounting, RampSee how Ramp automates accounting for 25k+ businesses
There is no definitive answer to this question as it will depend on the specifics of the service contract in question. However, some possible expense categories for a service contract could include:
Operating Expenses
If the service contract is for something that is necessary for the day-to-day running of the business, it is likely to come under operating expenses. This could include contracts for things like office cleaning, IT support, or security.
Capital Expenditures
If the service contract is for something that is a long-term investment for the business, it is likely to come under capital expenditures. This could include contracts for things like equipment leasing or maintenance, or property repairs.
One-Off Expenses
If the service contract is for something that is not an ongoing or long-term expense, it is likely to be classified as a one-off expense. This could include contracts for things like one-time event security, or the installation of a new piece of equipment.
Discretionary Expenses
If the service contract is for something that is not essential to the running of the business, it is likely to be classified as a discretionary expense. This could include contracts for things like advertising or PR services.
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SVP Finance & Strategy, Barry's
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.
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