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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/c | Debit | Debit all expenses and losses |
| To Cash a/c | Credit | Credit what goes out |
(being telephone bill paid)
2. According to the modern rules of accounting:
| Telephone charges a/c | Debit | Debit the increase in expense |
| To Cash a/c | Credit | Credit 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/c | Debit | 10,000 |
| To Cash a/c | Credit | 10,000 |
(being telephone bill paid)
