Recording expenses and payments
Objective: Distinguish expense entries from liability payments.
Recommended first: Your first journal entries
Paying for something used up this period is an expense. Paying a bill you already recorded is not — it settles a liability. Ask: was this cost recorded when the bill arrived?
- Rent for the current month → Rent Expense.
- Paying last month's supplier bill → Accounts Payable.
- Buying supplies to use later → Supplies (asset).
The most common beginner error in this area is recording the same cost twice: once when the bill arrives and again when it is paid. The fix is a simple question at payment time — is there an open bill in Accounts Payable for this? If yes, the payment debits Accounts Payable. If the cost was never billed and is for the current period, the payment debits the expense directly.
Supplies are another trap. Buying supplies to use later creates an asset; only the portion used becomes Supplies Expense at month-end.
Check your work
- Was this cost already recorded when the bill arrived?
- Is the benefit used up this period (expense) or later (asset)?
- Does the cash credit match the amount actually paid?
A $300 supplies bill recorded last week is paid today.
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | $300.00 | |
| Cash | $300.00 |
Common mistakes
✗ Debiting an expense when paying a recorded bill.
✓ The expense or asset was recorded with the bill; payment reduces Accounts Payable.
Guided practice
Use hints freely here.
Item 1 of 2
Pay this month's rent
On Mar 5, 2026, Peak Form Fitness Studio pays $900.00 rent for the current month by check #301.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 8
Pay a utility bill
On Mar 6, 2026, Corner Bean Café pays its $380.00 electricity bill for the month online.
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Key terms
- Accounts payable
- Amounts owed to suppliers.
- Expense
- A cost used up in earning revenue.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.