Expenses Help :-(

Clarekaye

Its times like this I think my god how have I got as far as I have and not had to ask it before :-/

If you have a general expenses ledger...... how come the cashbook showing you have spent £xxx in the year is on the debit side?

I know to increase a expense you debit it, so is the cashbook a payment?
and then how come the amount you transfer to p&l is on the credit, does that put a debit or credit figure on the p&l?

Oh my I feel so stupid its going to be a really obvious answer maybe I can blame how cold my house is for my brain not working well.
Thanks!

Henry

When you pay money from the cashbook you credit the cashbook. The balance that is transferred to the P & L is never from the cash book. The balance will be from the Expense account which goes first to Trial Balance and then to P & L. Expenses are also debited to the P & L unless it is a pre-paid expense in which case it is an assest on the balance sheet. Similarly bank balances only go to the balance sheet and not P & L. Hope that helps.

anisurrahman

Clarekaye wrote: »

If you have a general expenses ledger...... how come the cashbook showing you have spent £xxx in the year is on the debit side?

- 'Cash book' Debit for Cash sales or money received from your customers

Clarekaye wrote: »

I know to increase a expense you debit it, so is the cashbook a payment?

You are correct

- Expenses Debit your 'Expenses account'.

- Credit your 'Cash book' when you pay to your suppliers or for cash purchases

I believe Henry's reply is sufficient.

- Ronnie