What is paid electricity bill journal entry?

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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 deriving genuine net profit at the end of the accounting year.

 

Journal Entry for Electricity Bill paid

1. Traditional Accounting Approach

Particulars L.F. Amount Nature of Account Accounting Rule
Electricity Bill a/c XXX Nominal Debit- All expenses and Losses
 To Bank a/c  XXX Personal Credit- The Giver.

(Being Electricity Bill paid)

 

2. Modern Accounting Approach

Particulars L.F. Amount Nature of Account Accounting Rule
Electricity Bill a/c XXX Expense Debit- The Increase in Expense.
 To Bank a/c  XXX Asset Credit- The Decrease in Asset.

(Being paid electricity bill)

 

Example

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

In the Books of Alex Ltd.

Date Particulars L.F. Amount Nature of Account Accounting Rule
12th March Electricity Bill a/c 8,000 Expense Debit- The Increase in Expense
 To Bank a/c  8,000 Asset Credit- The Decrease in Asset.

(Being paid electricity bill through cheque)