Electricity Bill Expenses Come Under Which Account

Electricity Bill Expense Is Which Type / Kind Of Account (Electricity Bill Expense Is Direct Or Indirect)

Electricity Bill Expense is a Nominal Account as it is closed to Income Summary Account at the end of the accounting period. This Expense is recorded in Income Statement as an indirect expenses if it is not related with direct cost or cost of production.

But electricity bill expenses are neither considered as real accounts (accounts related with assets and liabilities) nor personal accounts (accounts related with natural and artificial persons i.e., Sole Proprietor such as Mr. A, ABC Company such as ABC Company’s Account , etc.). However, when these become due then these are considered as real accounts i.e., liability for the company paying electricity bill and assets for the supplies of the electricity.

Is Electricity Bill An Expense Or Asset?

Actually, electricity bill is an expense as these are paid to suppliers of the company every month in order to operate the business during the accounting cycle and not an asset which is used in the business for office purposes. However, when it is due then it becomes payable (liability) for the period.

However, when a company paid electricity bill expenses in advance, then these expenses are called Prepaid Expenses i.e., Prepaid Electricity Bill Expenses or Electricity Bill Expenses Paid In Advance, which are considered as Current Assets as the company made payment in advance but still the benefits or services i.e., electricity is not received by the company from the suppliers of electricity company against the payment made in advance for the month.