Utilities Expense Là Gì

     

What is Utilities Expense?

Utilities expense is the cost incurred by using utilities such as electricity, water, waste disposal, heating, & sewage. The expenses are incurred over the course of the reporting period, calculated, & accrued for, or payment is rendered.

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With the accrual basisAccrual PrincipleThe accrual principle is an accounting concept that requires transactions to be recorded in the time period in which they occur, regardless of of accounting, the total amount recorded as utilities expense reflects the cost of the actual usage of the utilities during the reporting period. It does not matter whetheran invoice has been sent by the utility supplier to lớn the company. If there is an amount to lớn be charged that applied to the previous month, it is charged to the current month.


Summary

Utilities expense is the cost – during a given time period – of using things such as electricity, water, & heating.Depending on how utilities are used, a company accountant may allocate costs associated with utility use lớn various departments.The accrual basis of accounting and cash basis of accounting will tài khoản for utilities differently – the accrual basis will record the expense when used, and cash basis will record it when paid.

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Other Classifications of Utilities Expenses

Utilities expenses are not always listed as such. Depending on how different utilities are used, they may be allocated lớn different departments. For example, the total amount of utilities used in order khổng lồ help a company sell goods and/or services may be listed as a selling expense. Utilities used for administrative duties can be listed as an administrative expenseSG&ASG&A includes all non-production expenses incurred by a company in any given period. It includes expenses such as rent, advertising, marketing.

Utilities that are used to help with manufacturing operations are commonly put into the factory overhead account. This means that the expenses become part of a cost pool, which is then divided up according lớn the units that are produced during the billing period. Sometimes, not all units are sold. The expenses tied khổng lồ the units that aren’t sold are listed as inventory assetsInventoryInventory is a current asset tài khoản found on the balance sheet,consisting of all raw materials, work-in-progress, & finished goods that a and not immediately listed as an expense.

Cash Basis of Accounting for Utilities Expenses

The accrual basis of accounting for utilities is the most commonly used accounting method. However, there is another means of accounting – the cash basis. With cash basis accounting, the total amount recorded for the use of utilities for each period is based on the amount of cash that’s been paid for said utilities during the period covered. It means that cash basis accounting may mean the expense is recorded in a later period.

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The accrual basis of accounting recognizes utilities expenses as incurred compared khổng lồ the cash basis accounting method when the bills are paid. However, both methods should eventually reflect the same final numbers.

More Resources

Thank you for reading CFI’s guide to Utilities Expense. Lớn keep learning & advancing your career, the following CFI resources will be helpful: