What is the practical difference in these? Is one for expense recognition and the other as a "holding" account until you credit cash when you pay it? When that electric bill comes in,do you utilities expense or utilities payable it first? Thank you in advance.

Expense is asset/ payable is liability. OK got it 2 seconds after my post. OOPSie.

4dkids,

You had the general idea in your first post.

When a company incurs an expense that they won't be paying immediately (i.e. utilities) the amount gets debited to the expense account and credited to the accounts payable (liability) account.

Utilities expense - debit $300
Accts Payable - credit $300

At the time the utility bill gets paid, the amount will be debited against the accounts payable account, and credited from cash.

Accts Payable - debit $300
Cash - credit $300

END RESULT: Cash - credited - $300; Utilities expense - debited - $300

You are correct that accounts payable is a liability, but an expense is NOT an asset.

I hope this helps!
JoAnne

I must just associate it with assets because it also increases with a debit. One of my biggest challanges is to figure out what account goes where.

D-E-A-L: Dividends&draws, Expenses, Assets, Losses increase w/ debit

G-I-R-L-S: Gains, Income, Revenue, Liabilities, Stockholder(owner) equity increases w/ credits

This is good, but throw in prepaids, accrued, depreciation, defered, etc. and it gets a bit hairy.
Thanks for your faithfulness!!