How to Record Unallowable Costs
Accounting for costs that are specifically excluded from recovery under FAR 31.205 regulations.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Expenses - Lobbying | Debit | 2,500.00 | - |
| Cash | Credit | - | 2,500.00 |
💡 Accountant's Note
Government contractors must segregate unallowable costs from allowable ones to ensure they are not included in indirect cost pools or billed to the government.
Practitioner & Systems Framework
💻 ERP Architecture
Use unique 'below-the-line' general ledger accounts or specific cost codes to automatically exclude these from overhead rate calculations.
⚠️ Audit Flags
High-risk area for DCAA audits; failure to segregate can lead to penalties under FAR 42.709.
📄 Required Documentation
Invoices, receipts, and a clear description of the nature of the expense for FAR 31.205-22 compliance.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Defense, Aerospace & Government Contracting
Cost-Plus-Fixed-Fee (CPFF) Contract — Revenue Recognition as Costs Are Incurred
Defense, Aerospace & Government Contracting
Firm Fixed-Price (FFP) Contract — Cost-to-Cost Percentage of Completion Revenue
Defense, Aerospace & Government Contracting
Time & Materials (T&M) Contract — Revenue at Contractual Labor Rates Plus Material Cost
Discussion & Community Questions
Loading comments...