Can the consumption bill be recorded

What should a business record when receiving a utility bill?

When a business receives an utilities bill it needs to record these as expenses. For example, suppose a business receives a utility bill for 500 and is given credit terms from the supplier. The accounting records will show the following journal entry in respect of the bill for utilities:

When does a company record a utility expense?

When the company only receives the invoice of utility use at the beginning of the next period, it usually uses the amount in the last period utility invoice to record the utilities expense in the above journal entry.

When should a utility bill be paid?

On the balance day, the accrued expense of utility is treated as a current liability (accounts payable or accrued expense) owed to the utility company, and an expense (Utility Expense) incurred by the company in February. In the reporting period of March, the company should record its cash payment on March 25 for its utility bill.

Should utility expenses be recorded in financial statements?

Companies must consider the method of compensation for recording utility costs to ensure accurate financial statements. Utility expenses are recorded in accrual accounting when they occur, not when compensated, and companies may estimate utility expenses and report them in financial statements if a reliable figure is unavailable.

What journal entries are included in a utility bill?

The accounting records will show the following journal entry in respect of the bill for utilities: The business has received a utility bill and this is recorded as an expense in the income statement. The credit entry represents the liability to pay the supplier in the future for the use of the utilities.

Why did ABC understate utilities expense in June?

As the recorded utilities expense of electricity was only $4,800 previously due to the company ABC follows the May invoice, it needs to add $200 more in the utilities expense account. Since the payment of electricity is assuming to be in the first week of July, the utilities expense in June was understated by $200.