How do I account for expenses entered as journals?

What a journal is, and why it matters here?

A journal is an entry your accountant uses to adjust or reallocate a transaction after it has been recorded, or to record a cost that never passed through a bank feed or supplier bill.

Common examples include splitting a twelve-month subscription invoice across the periods it relates to, accruing for a cost that has not yet been invoiced, reclassifying spend between accounts, or capitalising a cost to the balance sheet.

Because journals sit outside the automatic import, spend that exists only as a journal will not appear in your Trace data unless you add it.

Why Trace maps spend at transaction level

Trace maps spend by supplier name, transaction by transaction. Supplier detail provides an accurate and granular view of the underlying activity: the supplier tells us what was actually bought, whereas an account code such as "office expenses" does not.

Journals rarely carry supplier-level detail, so including them would mean importing entries that cannot be mapped reliably to an activity or emissions factor. Excluding them is a deliberate design choice. The trade-off is that a small number of expenses need to be added manually.

Which expenses to check for

Before you submit your measurement period, review your general ledger or trial balance for:

• Journal-only expenses. Costs with no supplier bill or bank transaction behind them.
• Accruals and prepayments. Where the cost sits in a different period from the original invoice, particularly across a financial year-end.
• Reclassifications. Spend moved between accounts after the original transaction was recorded.
• Capitalised costs. Expenditure taken to the balance sheet rather than through the profit and loss.
• Intercompany allocations, recharges, and manual corrections.

Example: a capital expense capitalised on the balance sheet

Your company spends $250,000 on fit-out works for a new office. The cost is capitalised to the balance sheet and depreciated over several years, so it does not appear as an expense in the profit and loss. The entries that record the capitalisation are journals.

The emissions still belong in your inventory in the year the goods and services were purchased. To capture them:

1. Go to Map your expense data.
2. Import the original expense transaction or transactions, with the supplier name, date, amount, and account, as they were first recorded.
3. Upload a CSV file in the Trace format.
4. Do not enter the depreciation charge or the journal that capitalised the cost. Emissions follow the purchase, not the accounting treatment applied in later years.
5. Alternatively, you can add the expense data under Activity Data > Purchased Goods & Services (expense).

Taxes and payroll are also excluded

Trace excludes taxes and payroll by default, so mapped spend will never sum to your total operating expenditure. This is expected, and these are known exclusions rather than gaps.

Completeness of source data sits with you

Trace is transparent about its methodology and about what is and is not imported. Confirming that the source data is complete sits with your finance team.

The check to run is that total expenses per account uploaded into Trace should reconcile to your financial statements, with journals, payroll, and taxes identified as the known differences. Keeping a record of that reconciliation is also what an assurance provider will look for when they test the completeness of your spend-based emissions.

If you upload a CSV instead of connecting your accounting platform

Where you upload transaction-level data via CSV rather than connecting Xero, MYOB, or QuickBooks, Trace maps exactly what is in your file. Check with whoever prepares the export whether journal entries are included.

If they are not, treat the file the same way: identify the missing expenses and add them through an additional CSV or Activity Data (Expenses) entry.