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  1. Palak

    A company incurs several expenses arising from its operating activities. For example, rent, rates, taxes, telephone bills, electricity bills, etc. It is important to record the same in the books of accounts to ascertain the true financial position of a company. Journal entry for paid telephone billRead more

    A company incurs several expenses arising from its operating activities. For example, rent, rates, taxes, telephone bills, electricity bills, etc. It is important to record the same in the books of accounts to ascertain the true financial position of a company.

    Journal entry for paid telephone bill

    The telephone charges a/c is debited and the respective cash or bank a/c is credited.

    1. According to the golden rules of accounting:

    Telephone charges a/cDebitDebit  all expenses and losses
    To Cash a/cCreditCredit what goes out

    (being telephone bill paid)

    2. According to the modern rules of accounting:

    Telephone charges a/cDebitDebit the increase in expense
    To Cash a/cCreditCredit the decrease in asset

    (being telephone bill paid)

    Example

    ABC Ltd. paid the telephone bill amounting to 10,000. The journal entry in the books of ABC Ltd is as follows:

    Telephone charges a/cDebit10,000
    To Cash a/cCredit10,000

    (being telephone bill paid)

    Hope this helps.

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