Question

Paid electricity for the month $1200 cash. The journal entry to record the transaction is:

Select one:

a. debit, cash $1200 and credit, electricity expense $1200.

b. debit, electricity payable $1200 and credit, electricity expense $1200.

c. debit, electricity expense $1200 and credit, cash $1200.

d. debit, cash $1200 and credit, electricity payable $1200.

Answer 1

Answer For this question is option c.Debit ,electricity expense $1200 and credit, cash $1200

the journal entry for this transaction will be :

DEBIT CREDIT
ELECTRICITY EXPENSE A/C DR $1200
   TO CASH A/C $1200
   (Being electricity expense paid)

Here cash is been paid against electricity expense, according to golden rule of accounting when asset decrease it should be credited and the increase in expenses and losses should be debited , therefore the electricity expense should be debited as it is an increase in expense of the business.

option a is not correct becuase increase in expense is credited and decrease in cash account is debited here, according to golden rule this is wrong.

In option b also the increase in expense account is credited which is not a correct practice.

In option d the cash account is being debited , when cash is reduced from business which is not a correct practice.