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accounting- payable vs. expense
#1
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.
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#2
Expense is asset/ payable is liability. OK got it 2 seconds after my post. OOPSie.
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#3
4dkids Wrote: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 Smile
BS - General Business - June 2007
Excelsior College
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#4
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!!
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#5
The balance of Salaries payable on Jan 31 is 1200, The trial balance of salaries expensed at Jan 31 is 1800. During Jan 2500 was paid in salaries.
What was the balance of salaries payable at Dec 31 the previous period?

And why?
Thanks Steve:confused:
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