How to handle administrative expenses?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In the process of carrying out operating activities, any enterprise incurs costs that are not included in the cost of services, works or products. They are reflected in the period in which they appeared. These costs include administrative expenses.

Definition

The costs that are not included in the cost include costs that are not related to commercial or production activities. These costs are called administrative. These costs include costs:

1. For the maintenance of the personnel of the management apparatus of the enterprise and its structural divisions. The budget for administrative and management expenses includes funds that are allocated for logistics and transportation, including maintenance of company vehicles and compensation for the use of a personal vehicle for professional duties.
2. Operation and maintenance of structures, buildings, inventory, premises, equipment, etc.
3. Payment for business trips related to the professional activities of employees.
4. Maintenance and maintenance of technical facilities(alarms, communication centers, etc.).
5. Reception of representatives of other enterprises who arrived for negotiations to establish cooperation, members of audit commissions, boards of directors.
6. Payment for communication services.
7. Dispute resolution.
8. Auditing, advisory, information services.
9. Payment for management activities implemented by third parties, if the staffing table or job descriptions do not provide for the relevant functions.
10. Payment for the provision of services to housing and communal services organizations to ensure resource saving, regulation and accounting for the consumption of gas, heat, water.
11. Performance of mandatory annual as well as initiative audits of financial and economic activities.
12. Settlement and cash services and other banking services.

Cost recognition

Costs are recognized when the economic benefit is reduced, provided that it is possible to estimate its value reliably. Cost accounting is carried out together with an increase in liabilities or a decrease in assets. For example, when calculating salaries or calculating depreciation. Administrative expenses relating to the management and maintenance of the organization as a whole are accounted for on account. 92.

Articles

Administrative expenses related to the remuneration of the management staff are accounted for according to the nomenclature of positions. In particular, the accrued remuneration of the directorcompany, his deputies, employees of the economic and accounting departments, chief engineer, secretary-typist, etc. transferred to D-t sc. 92. At the same time, the account is credited. 66. Under the item "Contributions for social activities", contributions from the calculated salary of employees of the management apparatus are taken into account. In this case, account 92 is debited, and account. 65 is credited. Under the article "Business trips" the costs of employees of the administrative apparatus, the amount of lifting are taken into account. In this case, the account is debited. 92, and accounts 30, 37 are credited.

Other administrative expenses

This article counts costs:

1. For stationery, telegraph and mail.
2. Cost of forms for accounting, reporting, planning documentation.
3. Litigation. It should be said that the law allows the return of funds spent on litigation. For example, an enterprise may turn the costs of an administrative case against the defendants if its claims are satisfied.
4. Repair, depreciation, lighting, water supply, building heating.
5. Maintenance of official cars, patrol, fire services.
6. Remuneration for audit, legal and other services.
7. Settlement and cash and other banking services.

In these cases, the account is also debited. 92. Credited accounts:

1. Depreciation of non-current assets (13).
2. Inventory (20).
3. Settlements for other operations (68).
4. Wearing and low-value items (22).
5. Cashier (30).
6. Payments to employees (66).
7. Bank accounts (31).
8. Tax calculations (64).

Documents

The primary sources of information on administrative costs are:

1. Accounts and reports on the use of funds provided for travel.
2. Invoices.
3. Accounting calculations.

Write-off of expenses is made out by the certificate. On its basis, the account is debited. 91 and credited with c. 92. Analytical accounting is carried out in the report in the context of cost items aimed at managing and servicing production.

Economic viability

Any business administrative costs must be justified. Costs are recognized as such if their implementation is justified from an economic point of view and their assessment is expressed in monetary terms. In accordance with Art. 252 of the Tax Code, the validity of the costs incurred is determined not only by the actual income received in a particular reporting period. An important condition is the direction of costs for profit.

Justification criteria

As practice shows, the absence of a methodology by which the cost of enterprise management services is determined cannot act as a basis for not recognizing the justification of expenses. This conclusion is present in the resolution issued by the Federal Antimonopoly Service of the Urals District of April 4, 2007. The increase in the volume of sales proceeds and the growth of profit, of course, indicate the economic justification of the costs.

Outsaffing and outsourcing

Any enterprise has a limited amount of resources at its disposal. Sooner or later, the head of the organization has a need to reduce costs in all areas in which it is possible. In such situations, as a rule, first of all, the reduction of administrative and management costs begins. To this end, various activities are being undertaken. Changes in administrative costs can have a painful impact on the financial he alth of employees. However, in many cases this is entirely justified.

Outstaffing is actively used abroad. It represents the withdrawal of employees from the state. However, they do not stop working. They continue to perform their professional duties, but on slightly different terms.

Another way to cut costs is outsourcing. In this case, non-core functions are removed from the activities of the enterprise. They can be, for example, accounting, law, marketing, and so on. If necessary, the company can conclude an agreement with a company providing such services. Outsourcing allows you to concentrate on your core business.