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Answer :
When using the Cash-Basis method, the journal entry will be $100 credited to the Cash account. The check has been paid, and the utility company has received the payment.
The cash-basis method is an accounting approach that only recognizes revenues and expenses when they are paid or received, respectively. It differs from the accrual basis, which records transactions when they occur, regardless of when payment is made.
Journal entry for the payment of utility bill of $100.00 using the cash-basis method:
Debit: Utilities expense account = $100
Credit: Cash account = $100
The above journal entry would be made to record the payment of $100 made through check by the company to a utility company in cash-basis accounting.
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