An expense account is the right to reimbursement of money spent by employees for work-related purposes.
[3] In order to understand why expenses are debited, it is relevant to note the accounting equation, Assets = Liabilities + Equity.
[4] Expenses show up under the equity portion of the equation because equity is common stock plus retained earnings and retained earnings are revenues minus expenses minus dividends.
[4] In the United States, the use of an expense account can be traced back to George Washington, who chose to forego a salary and relied on an expense account to cover his purchases during his military leadership in the American Revolution.
[10] Expense accounts are also privately regulated by internal auditors for many employers, often to ensure funds are handled appropriately.