Can anyone help with an accounting question regarding receipt and payment of invoices?

Can anyone help with an accounting question regarding receipt and payment of invoices?
For example, if the company receives its electric bill on Feb 2 but doesn't pay it till Feb 28, do you need to enter anything in the general ledger/journal on Feb 2? It's accrual basis, and I did it originally the way you all have said. Thanks.


Answers:

jwishz:  Feb 2 Dr. Utility Expense-elec Cr. Accounts Payable When you issue the check Dr. Accounts payable Cr. Cash
2008-02-21 10:44:56
Chosen Answer
slappy:  You should record the bill as a payable or liability and expense on the 2nd and then on the 28th, when the payment is actually made, you should charge it to the appropriate payable account. This is the proper accounting for it, but could you get away with just recording the payment on the 28th???...if it isn't that strict of an environment - yeah, but if you need to show an accurate picture of where the company stands in between, the proper amount of debt is not reflected.
2008-02-21 10:48:12
Larry:  Depends. If the company uses the cash basis of accounting, they only record a transaction when the bill is paid. Most companies are on the accrual basis. With that method, transactions are recorded when they are incurred or earned, not necessarily when cash changes hands. The above transaction would be recorded as follows with the accrual method. Feb. 2: Utilities (Debit $xx.xx) Accounts Payable (Credit $xx.xx) Feb. 28: Accounts Payable (Debit $xx.xx) Cash (Credit $xx.xx) Larry (CPA)
2008-02-21 10:48:45