Table of Contents
- What is an expense category, and how does it differ from an expense account?
- How do you set up expense categories?
- Sample list of expense categories
- Where do expense items land in the Turkish Uniform Chart of Accounts?
- How do you keep the expense category list up to date?
- How does it work in Masraff?
- Frequently asked questions
- What are typical company expense items?
- How many expense categories should a company have?
- What is the difference between an expense category and a cost center?
- Should an unused expense category be deleted?
The category an employee picks when uploading a receipt decides which expense account the cost lands in at month end, which limit it is checked against and which line it shows up on in reports. When the category list is poorly built, the same taxi receipt is entered as "Transport" one month and "Other" the next, and the accounting team corrects every line by hand.
This article explains how to turn your company's expense items into expense categories, with a focus on companies in Turkey: the difference between a category and an expense account, the setup steps, a sample category list, account mapping under the Turkish Uniform Chart of Accounts (Tekdüzen Hesap Planı) and how to keep the list maintained over time.
What is an expense category, and how does it differ from an expense account?
An expense category is the label an employee chooses to describe a purchase; an expense account is the chart of accounts code accounting uses to record it. The two are linked but not the same.
The employee selects a name they understand, such as "Meals", "Accommodation" or "Parking". Accounting records the same cost in an account such as 760 or 770 and one of its sub-accounts. In a good setup the employee never sees the account code; the category, cost center and company are translated into the right account through a rule.
The distinction matters because the category list is written in the employee's language and the chart of accounts in accounting's language. Squeezing both into one list leads either to category names employees do not understand or to entries accounting cannot use.
How do you set up expense categories?
Expense categories are set up by starting from the company's real spending history and giving each category a single meaning and a single account rule. The steps below give a workable framework for most mid-sized companies:
- Pull your past spending. Export the last 12 months of expense receipts or accounting entries and group the most frequently recurring types of spend.
- Name them in the employee's language. Write "Shipping and courier" rather than "Services and benefits obtained externally". A category name should be clear enough that anyone looking at the receipt can pick it without hesitating.
- Give each category one meaning. If "Transport" covers both taxis and flights, you cannot see travel costs separately in reports. Separate local transport from intercity transport.
- Separate items with different tax treatment. Keep spend that behaves differently in terms of VAT rate, deductibility or KKEG (non-deductible expenses under Turkish tax law) in its own category.
- Do not confuse category with cost center. Instead of opening "Sales meals" and "HR meals" as two categories, use a single "Meals" category and let the cost center field carry the department.
- Limit the "Other" category. Make a description mandatory and review the lines that land in this category every month.
Sample list of expense categories
The list below is a starting proposal for the expense form of a mid-sized company in Turkey. The account column is only an example; it will vary with your own chart of accounts and your accountant's view.
| Category | Spend it covers | Point to watch | Example account |
|---|---|---|---|
| Meals | Business meals, overtime meals | If the number of attendees is captured, the per-person amount can be tracked | 760 / 770 sub-account |
| Accommodation | Hotel, guesthouse | Linking it to the travel form makes reporting easier | 760 / 770 sub-account |
| Local transport | Taxi, public transport | Frequent and small, so well suited to limit-based monitoring | 760 / 770 sub-account |
| Intercity transport | Plane, bus, train tickets | Kept apart from local transport, travel cost becomes visible | 760 / 770 sub-account |
| Fuel | Fuel for company vehicles | Vehicle expenses may have a KKEG portion | 740 / 760 / 770 sub-account |
| Parking and tolls | Parking, bridge and motorway tolls | Check that the receipt qualifies as a valid document | 760 / 770 sub-account |
| Entertainment and hospitality | Client entertainment, gifts | The business purpose should be written in the description | 760 sub-account |
| Stationery and office | Office supplies, small non-fixed-asset purchases | Purchases that count as fixed assets should be separated | 770 sub-account |
| Training and seminars | Courses, conferences, certifications | Attendee and topic should be written in the description | 770 sub-account |
| Shipping and courier | Parcels, courier | The tracking number should be written in the description | 760 / 770 sub-account |
| Undocumented and KKEG candidates | Traffic fines, spend without a valid document | Should be tracked separately as KKEG | 689 |
It is safer to keep the list short at first. When employees keep picking the wrong category, the problem is usually not too few categories but unclear names.
Where do expense items land in the Turkish Uniform Chart of Accounts?
Under option 7/A of the Turkish Uniform Chart of Accounts, expense items land in 7xx accounts by function; the cost center usually decides the main account and the category the sub-account.
In Turkey the Uniform Chart of Accounts is set out in General Communiqué on the Application of the Accounting System No. 1 (Official Gazette, 26.12.1992; in force from 01.01.1994). The communiqué offers two options for cost accounts:
- Option 7/A (by function): Expenses are tracked by the function they belong to. For example, the sales team's meal expense goes to 760 Marketing, Sales and Distribution Expenses, and head office's meal expense to 770 General Administrative Expenses. Production or service-production costs are tracked in 71x–74x and research and development costs in 750.
- Option 7/B (by nature): Expenses are tracked by type in accounts 790–798; for example 793 Services and Benefits Obtained Externally and 794 Miscellaneous Expenses.
The other sides of an expense entry are fixed too: deductible VAT goes to 191 Deductible VAT, and the reimbursement owed to the employee goes, depending on the company's preference, to 195 Job Advances or to the employee's sub-ledger under 320 Suppliers.
Example entry: a head office employee's parking receipt of TRY 120 with 20% VAT (example amount):
| Account | Debit | Credit |
|---|---|---|
| 770 General Administrative Expenses (parking sub-account) | TRY 100 | |
| 191 Deductible VAT | TRY 20 | |
| 195 Job Advances / 320 employee sub-ledger | TRY 120 |
KKEG items are also tracked in 689 Other Extraordinary Expenses and Losses and added back to the tax base at period end under Article 11 of Turkish Corporate Tax Law No. 5520. For details, see our guide to KKEG accounting entries. Always confirm which option you use and your category-to-account mapping with your accountant (mali müşavir).
How do you keep the expense category list up to date?
An expense category list stays current when it is reviewed at least once a year and whenever the chart of accounts changes; unused categories are deactivated, not deleted.
Deactivating instead of deleting matters: past expenses are linked to the category, and the category record has to remain for reports to stay consistent. Use this checklist during the review:
- Are the lines landing in "Other" concentrated in one type of spend? If so, a new category may be needed.
- Is there a category that has not been used at all in the last 12 months?
- Are two categories constantly picked in place of each other? They may need merging or clearer names.
- Does an account opened or closed in the chart of accounts affect the category mapping?
- Are category-based limits still current? For setting limits, see our expense policy guide.
How does it work in Masraff?
In Masraff, category is one of the standard fields on every expense; employees choose it when entering an expense in the web portal or the mobile app. The category list is defined to fit the company's own structure and is used alongside fields such as cost center, tag and project code.
Which account a category lands in is decided on the accounting side. The expense account comes from Table-based Account Determination or Detailed Account Determination, the VAT account from VAT Account Determination, and the employee account (195/320) from the user's sub-ledger code settings. Detailed VAT Determination also covers KKEG scenarios. The setup details are on the account mapping in Masraff page.
Categories are used for control as well:
- Expense Policy Engine: A limit can be defined for each category; when it is exceeded, either only a warning is shown or the process is blocked.
- Advanced Approval: The approval flow can be built by category; for example, meal expenses above a certain amount go to an additional approver.
- Block Categories: Takes selected categories out of use. This feature is used to close a category that is no longer needed.
Masraff integrates with more than 20 ERP and accounting systems; category and account mapping make sure the transferred entry lands in the right account.
Frequently asked questions
What are typical company expense items?
Typical company expense items include meals, accommodation, transport, fuel, parking, entertainment, stationery, training and shipping. In Turkey these items are tracked in the 7xx accounts of the Uniform Chart of Accounts.
How many expense categories should a company have?
There is no fixed number; there should be few enough that employees can choose without hesitating, and enough to give the breakdown reporting needs. Starting with a short list and expanding it based on the lines in "Other" is the safer approach.
What is the difference between an expense category and a cost center?
An expense category shows what the spend is; a cost center shows which department or unit it belongs to. Under option 7/A the account code is mostly determined by combining the two.
Should an unused expense category be deleted?
No, an unused category should be deactivated rather than deleted. Past expenses are linked to that category, so deleting it can cause inconsistencies in reports.