What Are Utility Expenses In Accounting - Definition - Meaning - Journal Entry

Utilities Expenses are related to the specific types of Facilities or Utilities (Benefits) provided by the company to the business in the form of Natural Gases, Water, Sewerage, Electricity, Telephone & Telecommunications, Cables and Satellite TVs, Multimedia and Internet, etc for the effective running of business operations.

Utilities Expenses works under Accrual Basis of Accounting and follows Matching Principle GAAP as the benefits are received by the company but the bill is not paid for the month, so it is the current liability of the company to pay for the Utility bills payable by it to the company provided to the business.

Utilities Expenses Journal Entry

When a company received a utility bill during the month, then it becomes the liability of the company to pay on due date for the bill against which it already received the facilities or benefits. The Journal Entry can be as shown below:

                                 Utility Expenses a/c  XXX

                                                                  Utilities Payable a/c  XXX

                                      (Utilities Expenses Accrued During The Accounting Period)

When the company paid the utilities expenses, then following paid utilities expenses journal entry is recorded as shown below:

                                    Utilities Expenses a/c  XXX

                                                                        Cash a/c  XXX

                                                   (Paid Utilities Expenses for the Month)