What is an expense report?

Definition

An expense report is the form an employee submits to list out-of-pocket business costs and ask to be paid back. It is a source packet, not a journal entry, and it sits in the file until someone reviews the lines and the receipts.

Where it shows up

Balance Sheet: Related to nothing extra until a later reimbursement payable is recorded.

P&L: Related to the expenses listed once they are approved.

Cash flow: Related to nothing extra until the later repayment.

See also: Expense Reimbursement · Spend Policy · Approval Workflow

When you look at the P&L, nothing hits from the form alone. The listed costs become expenses after the report is approved, and that later repayment is a different step.

The Balance Sheet does not move when the employee fills out the page. A payable appears only if the later repayment is recorded before cash goes out, which belongs on another page.

On the Statement of Cash Flows, there is no cash event yet. The employee's personal card or cash already moved outside the company books.

A stack of unreviewed reports is work in the inbox, not a balance-sheet account. Once approved, the lines tell you which expense accounts will be used when the repayment is booked.

How it works

The employee spent personal money on a business need. They open a report, name the trip or job, and add a line for each cost with the date, merchant, amount, and purpose.

Each line needs support. A register receipt, a fuel slip, or a merchant invoice is clipped or uploaded next to the amount so a reviewer can see what was bought.

The report is not cash and not a payable by itself. It is the packet that asks the company to accept those lines as business costs.

A reviewer reads the lines against what the shop allows. They check dates, dollar amounts, missing receipts, and whether parking for a delivery run is a business cost or a personal one.

If a line fails, it is sent back or crossed off. The rest of the report can still move forward, and the rejected line never becomes a company expense.

If the lines pass, the report is marked approved. That approval is what later lets someone record the expense and pay the employee, which is not this page.

The packet should name the employee, the period, and the total. Without those, a later check run cannot tell whom to pay or which week the costs belong to.

Shops keep the approved report with the receipts. That file is the trail from the P&L line back to the slip from the gas station, and it is what an auditor will ask to see.

Some reports are paper and some are a screen in the bookkeeping app. Either way the job is the same: list the out-of-pocket costs, attach proof, and get a sign-off before anyone cuts a check.

A purchase requisition is a request to buy before the money goes out. An expense report is the opposite timing, because the employee already spent and is documenting it after the fact.

Example

A florist sends a driver on a delivery run across town. After the run, the driver lists $54 of gas and $32 of parking, totaling $86, on an expense report with both receipts attached.

There is no journal for the form itself. The $86 sits on the report as a request until a manager approves the lines, and only then does a later repayment record the delivery cost and the cash out.

The receipts stay with the report. Anyone who later asks why delivery expense moved can open this packet and see the two slips.

Common mix-ups

An expense report is not expense reimbursement. The report is the form that lists the costs, and reimbursement is the later payment that pays the employee back.

An expense report is not a corporate card statement. A corporate card program charge is company money from the start, while an expense report is for costs the employee already paid personally.

An expense report is not the P&L expense by itself. The form is the request and the proof, and the expense is recorded when the approved lines are booked.

Related terms

• Expense Reimbursement: Paying an employee back for out-of-pocket business spending.
• Spend Policy: The written rules for what employees may buy and how it must be approved.
• Travel And Entertainment Expense: Costs for employee travel, meals, and client entertainment.
• Approval Workflow: The routing of a request or bill through the people who must sign off.
• Corporate Card Program: Company-issued cards used for employee purchasing under set rules.
• Source Document: The original receipt, bill, or statement that supports an entry.
• Accrued Liabilities: Expenses incurred but not yet billed or paid at period end.
• Operating Expenses: The ongoing costs of running the business that are not direct costs of sale.