Expenses Help :-(

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Clarekaye
Clarekaye Registered Posts: 307
in AAT Level 3 (Level 6 in Scotland)
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!

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  • Henry
    Henry Registered Posts: 56 Regular contributor ⭐
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    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
    anisurrahman Registered Posts: 130 Beyond epic contributor 🧙‍♂️
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    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

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