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A compa ny paid cas h to suppliers, creditors or accou nts payab le for goods purchased o n account or credit. A company may need cas h to purc h ase goods for running its b usi ness operations and suc h requirement is fulfilled b y suppliers of goods. It is a Cas h Payme nt and outflows of cas h from the poi nt of view of b usi ness. T he jour nal entry to record cas h paid or check paid to supplies is recorded i n Cas h Book a nd Creditor or Accounts Payab le Ledger’s Account . Following journal entry is recorded as s how n b elow:                       Creditors a/c / Accou nts Payab le a/c  XXX                                                                                   Cash a/c / Ba nk a/c...

Paid cash on accou nt or for Cash arises when we make payments to or receive cash payments from either customers, suppliers or company to whom we receive services such as rent facilities, transportation services, etc. When Cash Paid On Account In that case, we create either Current Assets or Fixed Assets . For example, if we paid advances to customers or Paid Rent In Advance within a period of one year, then it creates current assets and if we paid for a period of more than one year then it creates fixed assets. The Journal Entry to record is as follows:                                           Prepaid Expenses a/c  XXX                                                               ...