Expense Allocations refer to the methodical distribution of a company's expenses to specific departments, cost centers, or projects to ensure accurate financial reporting and analysis. This process helps businesses understand where their funds are being utilized and allows for precise tracking of financial performance against budgets.

For example, if a company incurs utility costs that benefit multiple departments, the expense is allocated proportionally across those departments based on predefined criteria, such as square footage or headcount. This allocation helps in evaluating departmental performance more accurately.

Expense Allocations are crucial for balancing detailed financial accounts like the Balance Sheet and for completing tasks during Month End or Year End close activities. Accurate allocations ensure that financial statements provide a clear and justified representation of expenditures, aiding in strategic decision-making and operational efficiency.