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Interior Design Accounting for Supplies

Ashley Anderson's Profile

Hi there,

How do interior design companies account for things such as decor items purchased? Should I put them in job supplies expense or cost of goods sold? I also thought about putting them in reimbursable items. I don't know how the company gets reimbursed for these items, nor do I know if they get reimbursed. I'm just trying to figure out the most common practice. Any input would be helpful.

Thank you.

Answers

Victor Shah
Title: Account Manager
Company: FlowRocket, LLC
(Account Manager, FlowRocket, LLC) |

Ashley,
You need to make sure if the decor items are reimbursable or not!

1. If the decor items are to be reimbursed, they need to be recorded as Reimbursable expenses or COGS. The reason behind it is, when the company will raise a debit note for the reimbursement of expenses, you would credit the same account that you have debited while making purchase. Thus, the account would technically be a control account where it should be zero or the balance should be invoiced.
2. If the decor items are non-reimbursable expenses, you can either categorize it as Cost of Goods or Job Supplies under Direct Operating Expenses depending on company policy. Either option of COGS or Supplies is not wrong technically.

Let me know if this helps!

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