What is Communication Expense In Accounting | Journal Entry

Communication Expense (CE) Meaning In Accounting

Communication expense is an Expense incurred by the business manager for communicating with customers / clients through various mediums such as Cell Phones, Telephones, Postages, Internet Calls and other technology channels in order to convey business’ message (such as news, updates, dealings, etc.) to customers / clients.

CE is a temporary account and it is recorded in Income Statement for the period and closed to Income Summary Account at the end of the accounting.

Communication Expense Journal Entry

A company may pay communication expense for cash or through check / cheque. When it is paid, then CE account is increased as it is incurred by the business, so we debit it and cash account or bank account, whichever is the case, is decreased as it is going out of the business. The journal entry to record for CE paid for cash / bank is shown below:

                                                           CE a/c  XXX

                                                                            Cash a/c / Bank a/c  XXX

                                                                (CE Paid For Cash / Bank)

Is Communication Expense A Distribution Expense?

No, as it is categorized under selling and administrative expense in Income Statement as it is related with internal management system which is responsible for conveying business messages to clients or customers. So it is not considered as a Distribution Expense.

Does Communication Expense Fall Under Cost Of Sales In Accounting?

If it is used for the cost of production and part of it, the it will be added to cost of sales as now it is a direct cost, otherwise, it is considered as indirect cost and recorded under the heading of Operating Expenses as selling & administrative expenses in Income Statement.