By hosting an event, it may involves transportation cost, accommodation cost, advertising cost and so on. How do you account for these expenses? Need to put into different accounts or just under an "event" account? While preparing for the annual budget, only a lump sum was reserved under "event" acccount instead of those "advertising", "transportation".
How to account for the various expenses of an event?
Answers
You can actually do it either ways depending on the reporting required by management. But for a better reporting purpose, i would personally do it by creating those Advertising, Transportation and such expenses as sub-account of Event Account. This way your summarized Budget v/s Actual and Income Statement will only have Event Expense as comparison and you can have actual reported as well by a separate category of expenses as sub account.
I hope this helps.
Let me know if you have any other specific questions.
Hi
Cost should definitely go in respective GL.
Event is an activity. An activity will have many costs in it. Budget can be defined at activity level.
If you use SAP, you can define budget for event activity by creating an AFE and internal order number. Actual costs will be in different GLs but all rolling into same internal order number which has an overall budget attached to it
The way you track the various expenses for an event in your GL depends on how flexible the GL structure is. If your GL supports a Project dimension being tagged to transactions, then you can define a project number/ID for for each event, then make sure all event -related transactions are posted with that ID.
If you don't have the Project option, you can try using a separate Cost Center (it clumsy, it works, but it's not as clean as a Project ID). It's clumsy because if people in different cost centers go to the event, their expenses go to the Project Cost Center, not their home Cost Center. But at least it is easy to report on the total event spend.
Either way, the natural account remains the same: hotel, advertising, travel, etc.
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Accounting