72 – Legal & Auditing

Operating Expenses

 

Synopsis

Account 72

Debits

Credits

  1. The expense incurred for legal, auditing, and tax service.

  2. The monthly accrual of estimated legal and audit fees.

 

 

Remarks:

Charges to this account include such items as professional legal counsel, auditing services of an outside firm, and recording or filing fees.

When legal, auditing, or collection expense is paid in advance, the amounts should be debited to Prepaid Expenses - Other (Account 269D), and charged to expense on a monthly basis.

Normally, the annual outside audit fee should be determined and accrued on a monthly basis.

Monthly accounting services to close the books and prepare the financial statement should be charged to Outside Services (Account 68).

Electronic accounting services should be charged to Data Processing (Account 77).

Expenses in this account should be distributed to the respective operating department or prorated as applicable.