Telephone Charges are indirect expenses of a business. These are not just an entity’s office/fax/toll-free/call centre expenses. But will also include the voice/data plan reimbursements to its employees. Nowadays, entities provide a smartphone to their employees to ensure they are current with work-related emails, notifications, and messages. So, telephone charges contribute a decent portion of indirect business expenditure. Before we start learning how to record the Paid Telephone Charges Journal entry, we will understand some fundamentals relating to this transaction.
Table of contents
- Recording the Paid Telephone Charges Journal Entry
- Your Questions and Our Solutions
- Summary of Paid Telephone Charges Journal Entry
Now, we got a concrete understanding of the nature of this account balance. So, we can try to resolve all the basic questions like the type of Account, applicable accounting rules, and different considerations before recording the journal entry.
What type of Account are telephone charges?
Telephone charges are in the nature of expenses and fall under the Nominal Account category of the Golden rules of accounting. Rental expenses is another similar indirect expenses. Read more about the rent paid expenses journal entry.
What is the Golden Rule of accounting applicable for Telephone Charges?
Nominal Accounts Golden rule is “Debit all expenses or Losses and Credit all Income or gains.”
What are the other considerations relating to the telephone expenses journal entry?
We need to identify the other GL accounts which are affected due to this journal entry.
How do I record telephone charges?
Telephone Charges are recorded by debiting the telephone expenses and crediting the Liability.
Recording the Paid Telephone Charges Journal Entry
We need to identify all the GL accounts that are part of this transaction. Another GL Account that will be part of the second leg of the journal entry is telephone charges payable GL. This GL is a Liability account, and it’s part of a Personal Account.
Per Personal Account Golden Rules of Accounting, Debit the Receiver and Credit the Giver. Therefore, the Liability account will be credited in the journal entry and let’s see the Journal entry.
The subsequent Entry for payment will be
The Telephone expenses Payable GL gets nullified. Therefore, the Paid telephone charges for journal entries will be
Your Questions and Our Solutions
Is telephone charges debit or Credit?
Telephone charges are expenses to the business. So, those expenses will be on the debit side of the journal entry because it falls under Nominal Account.
Is the telephone an asset or expense?
The Monthly Telephone charges are expenses. However, if any costs are incurred as a refundable deposit, it will qualify as an asset. The point that needs attention here is the classification of such deposits. If the refund period is less than 12 months, then it can be part of the current asset; otherwise, it’s a non-current asset.
Telephone bill received but not paid journal entry
Telephone bills received but not paid journal entries will be nothing but the accrual of expenses. It’s common across all industries to record the monthly accrual of telephone expenses. So, the Entry will be debiting the telephone bill with corresponding Credit to the telephone payable liability GL.
Paid telephone bill debit or Credit
The telephone bill will be debited in the journal entry.
Telephone charges come under which Account
Telephone charges are not an essential expenditure that directly supports the entity’s business. However, it does have an indirect effect. As such, it’s an indirect expense falling under the non-operating expenses grouping.
Paid telephone expenses by cheque
The Entry to record these paid telephone expenses by cheque is nothing but payment through the bank. So, the Entry will be debiting the telephone expenses and crediting the bank account.
Summary of Paid Telephone Charges Journal Entry
There are two approaches for recording the Paid telephone charges journal entry. It can directly hit the telephone expenses and bank account. So, the telephone bill is debited, and the bank account will be credited. Refer to the third table above for the JE.
The other approach is to accrue the expenses by recording the
- Telephone expenses and Liability Accounts will be on the debit and credit side of the journal entry (Refer to the First table above for the JE)
- The liability Account and Bank Account will be on the debit side and credit side of the Entry (Refer to the Second table above for the JE)
Therefore, the net Entry will knock off the Liability account, telephone expenses will be on the debit side, and Bank Accounts will be on the credit side.