A stock option expense journal entry is a type of accounting transaction that businesses use to record the expenses associated with issuing and granting stock options to employees or executives. When an employee exercises their stock option, the business must “expense” the amount by recording the cost in the company’s books. This is done through the stock option expense journal entry, which assigns the cost to an appropriate expense account in the company’s general ledger. Entries like these can help businesses keep accurate records of their finances, ensuring compliance with applicable accounting standards.