What are Incidental Expenses- Meaning, Pay, Track, and Reimburse

Incidental expenses refer to additional costs or charges that are directly related to a particular activity, transaction, or event but are not considered the primary expense. These expenses are often small in comparison to the main costs but are necessary to complete the activity or transaction. Understanding incidental expenses is important for accurate financial planning, budgeting, and expense tracking in both personal and business contexts.

What are the incidental expenses is a vital topic to be studied for the commerce related exams such as the UGC-NET Commerce Examination.

In this article the readers will be able to know about what are incidental expenses, along with other related topics in detail.

What are Incidental Expenses?

Incidental expenses, though seemingly trivial, are a part of the business travel expenditure. These are the unexpected costs that an employee might encounter while on a business trip. Often, these expenses are minor and don't require a receipt for reimbursement, particularly if they fall under a predetermined threshold or if obtaining a receipt is challenging. Here are a few common examples of incidental expenses that are typically paid in cash:

• Tips for hotel staff and bellboys
• Local conveyance
• Food and drink expenses
• Telephone and internet charges

Guidelines to Pay, Track, and Reimburse Incidental Expenses

The details are stated below.

• The company's employee handbook typically outlines the policies and procedures for incidental expenses.
• There are limits on the type, quantity, and monetary value of incidental costs that can be classified as business expenses. Anything that exceeds these limits must be borne by the employee.
• Depending on the company's policy, the employee may need to pay these expenses out of pocket or use a company credit card.
• It's essential to track these expenses for accounting and tax purposes.
• Employees should maintain a detailed record of all transactions and purchases.
• These records, along with the corresponding receipts or bills, should be logged in the company's expense logbook and submitted for verification.
• Reimbursements should ideally be made via cheques or direct bank transfers to ensure a clear record of payment.

Dealing with Incidental Expenses from Theft or Casualty

Incidental expenses related to property theft or damage are considered ordinary if a business suffers a loss or casualty. For instance, if a company's office is damaged by fire, the company will have to bear the cost of repairs and theft or damage replacement. Additional expenses may include the cost of moving and storing materials, medical expenses for any injuries, and the cost of renting temporary workspace.

Conclusion

Incidental expenses are ancillary costs or charges incurred in addition to primary expenses associated with a specific activity, transaction, or event. While these expenses may be relatively small compared to the main costs, they are essential for completing the task or achieving the objective. Examples of incidental expenses include transportation fees, parking charges, tips, minor repairs, and other miscellaneous costs incurred during the course of business or daily life. Proper identification and management of incidental expenses are important for maintaining financial accuracy, transparency, and accountability.

What are incidental expenses is an essential topic as per several competitive exams. It would help if you learned other similar topics with the Testbook App.