Expense Account Ranges

Vision's Standard Chart of Accounts divides expense accounts into three categories: reimbursable, direct, and indirect.

Reimbursable Expenses

Reimbursable expenses are the expenses that you expect to be reimbursed for by the client. They are associated with a revenue-producing regular type of project.

Use a reimbursable expense account if, or example, your firm must hire an outside consultant to work on a project. You will pay the consultant for their services performed and bill the client for the consultant’s fees. Another example of a reimbursable expense is transportation or meal charges associated with a project, when the client is responsible for paying these.

Direct Expenses

Direct expenses are the expenses that you do not expect to be reimbursed for by the client. These expenses may be part of a negotiated fee or may be beyond the scope of the contract and not reimbursable. They are associated with a revenue-producing regular type project.

Examples of direct expenses may be unexpected travel, phone charges, or charges that were not specified as part of the fee.

Indirect Expenses

Indirect expenses are the expenses that you associate with overhead or promotional type projects.

Examples of indirect expenses include electricity, office supplies, payroll benefits, and vacation time. These expenses are not directly associated with any one project; rather they are the general operating costs of your firm.

On Income Statement and Balance Sheet

  • All reimbursable, direct, and indirect expenses appear on the Income Statement, which is a year-to-date report. The Operating Profit/Loss amount, listed at the end of the Income Statement, ties directly to the Current Year's Profit (Loss) account balance on the Balance Sheet.

  • When you initialize for a new fiscal year, Vision zeros the revenue and expense amounts on the Income Statement and moves the amount from the Current Year's Profit (Loss) account to the Previous Years' Retained Earnings account on the Balance Sheet. This step prepares the Income Statement to begin collecting revenue and expense amounts for the new year’s profit/loss activity.