When the expenses are incurred on visits out of station by the employees of the business firm then these expenses are booked under traveling expenses account. Traveling expenses include the cost of train ticket, bus ticket or air tickets, staying charges in hotels or guest houses, food expenses and conveyance expense etc. incurred by the employees of the business firm while on the tour out of station. In this connection, one point must be kept in mind that tour must be totally for official purpose. No personal expense incurred by the employee should be included in traveling expenses.

For control purpose, sub account heads can be prepared under traveling expenses account like Traveling expense – inland, traveling expenses – foreign, fare charges, lodging expenses, food expenses, daily allowances, other expenses etc.

The Accounting Treatment of Traveling Expenses 

a) For expenses paid in cash or by cheque:-

Type of Voucher to be prepared:- Cash or bank payment voucher

Entry to be passed

Debit:-   Traveling Expenses Account

Credit:-  Cash Account or Bank Account

b) For outstanding expenses:-

Type of voucher to be prepared:- Journal voucher

Entry to be passed

Debit:- Traveling Expenses Account

Credit:- Outstanding Expenses Account

or

Expenses Payable Account

Treatment of Traveling Expenses in Final Accounts

The traveling expenses are shown in expenditure side of profit and loss account. All outstanding expenses, firstly are added to traveling expenses and then these are shown in liability side of balance sheet at the time of finalization of the accounts.

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