When a business receives an utilities bill it needs to record these as expenses.
Utilities Bill Journal Entry Example
For example, suppose a business receives a utilities bill for 500 and is given credit terms from the supplier.
The accounting records will show the following journal entry in respect of the bill for utilities:
The business has received a utilities bill and this is recorded as an expense in the income statement.
The credit entry represents the liability to pay the supplier in the future for the use of the utilities.
Received Utilities Bill Accounting Equation
The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the total equity of the business. This is true at any time and applies to each transaction. For this transaction the accounting equation is shown in the following table.
|None||=||Accounts payable||–||Utilities expense|
In this case the balance sheet liabilities (accounts payable) have been increased by 500, and the income statement has a utilities expense of 500. The expense reduces the net income, retained earnings, and therefore owners equity in the business.
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