Expense Entries
Expense Entry in Text Books
We record entry in text books
Expense A/c – Dr.
To Party/ Cash / Bank A/c
later, we have to close the ledger and transferred to profit and loss A/c
Profit and loss A/c – Dr.
To Expense A/c
Expense Entry in Practical Life
We follow the concept of double entry
1.First entry -we book expense
Expense A/c- Dr.
To Party A/c
( Being Expense booked or Bill/ Invoice is received)
2. Second entry when payment is made
Party A/c- Dr.
To Bank/ Cash A/c
( Being payment made to party)
In practical life the transfer entry is not done it is automatically done by software like Tally.
Record Expense Entry in TallyPrime
Suppose we are in the business of consultancy and we need the internet to do lots of research and to provide consultancy on the fingertip. Internet bill received from Hathway Rs. 4,000/- received on 1st March, 2021 and online payment made on 2nd March, 2021.
We need the following ledgers:
1.Internet Exp. A/c – Under Direct/Indirect Expense. 2. Hathway A/c- Under Sundry Creditors. 3. Bank A/c
When we book entry on the 1st March 2021 the Internet Expense will be visible in Profit and Loss A/c and Hathway A/c in the balance sheet under sundry creditors. So let’s book entry. Click on the image.
Internet Exp. A/c Dr. 4000
To Hathway A/c 4000


Now when we made payment to Hathway on 2nd March, 2021 the ‘Hathway A/c’ will not be visible in sundry creditors as we made full payment so there is no balance.
Hathway A/c – Dr. Rs. 4000
To Bank A/c (HDFC) Rs. 4000
Click on the image so that it will be clearly visible.

In the below trial balance there will not be Hathway A/c as full payment made to Hathway so there is no balance.

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