What Are Telephone Expenses In Accounting

The Expenses incurred against the usage of Telephone Facilities such as Telephone Lines, Cell Phone Packages, etc. are called Telephone Expenses. These may be incurred in advance (Prepaid) or accrued but not paid at the end of the month.

Telephone Expenses Journal Entry

When telephone expenses are paid for cash or by bank, when payment is made with cheque / check and it is also deposited into the bank account, for the month, then journal entry would be as follows:

                                              Telephone Expenses a/c  XXX

                                                                                  Cash a/c / Bank a/c  XXX

                                                   (Paid Telephone Expenses For the Month)

Prepaid Telephone Expenses Journal Entry

When telephone expenses paid in advance, then these are Prepaid Expenses and following entry is recorded in the Books of Accounts:

                                             Prepaid Telephone Expenses a/c  XXX

                                                                                                Cash a/c  XXX

                                                         (Telephone Expenses Paid in Advance)

When the company actually receives the telephone facilities, then the portion of prepaid telephone against which services is received is transferred to telephone expenses account. We may do so by debit it as shown in the below adjusting entry:

                                           Telephone Expenses a/c  XXX

                                                                               Prepaid Telephone Expenses a/c  XXX

            (Portion of Prepaid Telephone Expenses Transferred To Telephone Expenses)

Accrued Telephone Expenses Journal Entry

When telephone expenses are accrued, outstanding or payable for the month, the following entry is recorded as shown below:

                                       Telephone Expenses a/c  XXX

                                                                             Telephone Expenses Payable a/c  XXX

                                              (Telephone Expenses Accrued For The Month)

When the company actually paid the telephone bill, then following entry is recorded as shown below:

                                           Telephone Expenses a/c  XXX

                                                                                 Cash a/c / Bank a/c  XXX

                                                 (Telephone Expenses Paid for the Month)

Telephone Expenses Direct Or Indirect

If these are related to the cost of production, then theses are direct expenses and if it is not, then these are indirect.