All the expenses relating to repair and maintenance of official vehicles are booked under vehicle maintenance expenses. These vehicles include all heavy vehicles which are used for transportation of goods or employees of the business firm and light vehicles which are used by the employees of the company. The amount spent for purchasing the petrol, general repair, insurance of the vehicles and the salaries of the drivers are debited in vehicle repair expenses. Some time for the purpose of control of the vehicle maintenance expenses, sub-account heads are created under vehicle maintenance expenses like petrol expenses account, insurance expense account, general repair account and driver’s salary account etc.

Accounting Treatment of Vehicle Maintenance Expenses

a) In case of payment of expenses in cash or by cheque:-

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

Entry to be passed

Debit:-      Vehicle Maintenance Expenses Account

Credit:-    Cash A/c or Bank Account

b) In case of outstanding expenses:-

Type of voucher to be prepared:-  Journal voucher

Entry to be passed

Debit:- Vehicle Maintenance Expenses Account

Credit:- Outstanding Expenses or Expenses Payable Account

c) In case of prepaid expenses:-

Type of voucher to be prepared:-  Journal Voucher

Entry to be passed

Debit:-           Prepaid Expenses Account

Credit:-       Vehicle Maintenance Expenses Account

Treatment of Vehicle Maintenance Expenses in Final Accounts

Vehicle maintenance expenses are shown in expenditure side of profit and loss account. Outstanding expenses are added to the vehicle maintenance expenses account and prepaid expenses in respect of the vehicle insurance expenses of vehicles etc. are deducted from the vehicle maintenance expenses. Prepaid expenses are shown in the assets side of balance sheet and outstanding expenses are shown in liabilities side of balance sheet.

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