Received And Paid Electricity Bill Journal Entry

Electricity Bill Definition And Meaning In Accounting

It is an example of Utilities Expenses and it is given by utility companies to customers for using the electricity facilities such as lights, electrical equipment using electrical power to generate heat or cooling, etc. for the month. Utility bill is payable for the month if it is not paid (unpaid) by the customer at the end of the accounting period.

Electricity Bill Payable Journal Entry / Unpaid Electricity Bill Journal Entry

When we received Utility Bill from the company, then it is our Current Liability to pay to the company for using the Gas, Electricity, Telephone or other Facilities, so we record the following Entry:check

                            Electricity Expense a/c / Utilities Expense a/c  XXX

                                                              Electricity Bill Payable a/c / Utilities Payable a/c  XXX

                                 (Received Utility Bill From the company for the Month)

Electricity Bill is a part of Utilities Expenses. When we paid Electricity Bill, which is an Expense Account for the business, then we debit it and credit cash account or bank account if it is paid through check / check and the same deposited into bank account. The following accounting Journal Entry is passed as shown below:

Electricity Bill Expense a/c / Utility Expense a/c  XXX

                                                                              Cash a/c / Bank a/c  XXX

                                                    (Paid Electricity Bill for the Month)

Electricity Bill is recorded on Income Statement under the categories of Utilities Expenses and it has no balance since it is closed to Income Statement at the end of the accounting period. However, we debit it when we paid it and credit it when close it to Income Statement. Electricity bill is an indirect expense if it is not related with the direct cost of production.