Expenses Example

Previous lesson: Accrued Income - Part 2
Next lesson: Accrued Expenses - Part 1

h) In order to be able to successfully pull off the catering job for the wedding and for future jobs, George decides to hire an assistant. He paid the assistant a $4,000 salary. What happens with this?

$4,000 cash paid means that our bank account will decrease by $4,000. Bank increases on the debit side (left), and decreases on the credit side (right). So we credit the bank account of the business.

The salary paid to the assistant is an expense, and this amounts to $4,000.

Expenses take place (or increase) on the left, because it is the opposite of income and means less for the owner (owner’s equity). We debit the expense, and we call it salaries.

Our accounting entry is:

This salaries expense will result in $4,000 less for the owner.

If you are having difficulty understanding expenses, go back to our earlier lesson entitled Define Expenses, where we define this accounting concept and look at how it works. Or, if you're struggling with the concept of debits and credits, return our earlier lesson called Debits and Credits: What They Really Mean.

Previous lesson: Accrued Income - Part 2
Next lesson: Accrued Expenses - Part 1

Read Other Questions Relating to This Lesson
(along with their answers)

Click below to see questions and solutions on this same topic from other visitors to this page...

Example of an Expense 
Q: What is an example of an expense?

Interest charged by the creditor on an overdue account... 
would be credit or debit? A: To answer this question you first have to work out what that interest is. Is it an asset, income, expense, liability? …

Return from Expenses Example to Double Entry Accounting

Return from Expenses Example to Home Page

New! Comments

Have your say about what you just read! Leave me a comment in the box below.

Search this site:

All the lessons on this site, plus much, much more...

Available Now On

Get Your Degree!

Find schools and get information on the program that’s right for you.

Powered by

Rent Textbooks at Knetbooks.com

Subscribe to
The Student Accountant newsletter

Your E-mail Address
Your First Name (optional)

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you The Student Accountant.