Answer: this is used for cash payments in order to record cash outflows.
Few examples of cash payments are purchase materials, labor payments, utility expenses, purchase of machinery in cash, etc.
The feature of cash payment is the credit to cash.
Suppose utility expense of $3,000 is paid.
Journal
Date |
Account titles and explanation |
Ref. |
Debit |
Credit |
Utility expenses |
$3,000 |
|||
Cash |
$3,000 |
|||
To record cash outflow in respect of the payment of utility expenses. |
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