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  1. Dheeraj
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    There are various operating and Non-operating expenses incurred by an organization in its ordinary course of business such as- Salaries, Legal expenses, Electricity charges etc., Therefore, it is the primary responsibility of an accountant to record all these expenses in the books of accounts for deRead more

    There are various operating and Non-operating expenses incurred by an organization in its ordinary course of business such as- Salaries, Legal expenses, Electricity charges etc., Therefore, it is the primary responsibility of an accountant to record all these expenses in the books of accounts for deriving genuine net profit at the end of the accounting year.

    Journal Entry for Electricity Bill paid

    1. Traditional Accounting Approach

    ParticularsL.F.AmountNature of AccountAccounting Rule
    Electricity Bill a/cXXXNominalDebit- All expenses and Losses
     To Bank a/c XXXPersonalCredit- The Giver.

    (Being Electricity Bill paid).

    2. Modern Accounting Approach

    ParticularsL.F.AmountNature of AccountAccounting Rule
    Electricity Bill a/cXXXExpenseDebit- The Increase in Expense.
     To Bank a/c XXXAssetCredit- The Decrease in Asset.

    (Being paid electricity bill).

    Example

    On 12th March, Alex Ltd. paid electricity bill amounting to 8,000 through cheque. Journalise the following transaction in the books of Alex Ltd.
    In the Books of Alex Ltd.

    DateParticularsL.F.AmountNature of AccountAccounting Rule
    12th MarchElectricity Bill a/c8,000ExpenseDebit- The Increase in Expense
     To Bank a/c 8,000AssetCredit- The Decrease in Asset.

    (Being paid electricity bill through cheque).

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