Expenses

The money a business spends in order to operate Examples: Salaries, Rent, Advertising, Utilities (water)

Expenses decrease Owner’s Equity The reason why it is a Debit because Owner’s Equity is decreased by adding Debit

Tip

Whenever you received a bill and immediately paid it

• Debit - Expenses
• Credit - Cash

Whenever you received a bill and did not pay it yet

• Debit - Expenses
• Credit - Accounts Payable

Whenever you paid a bill that was sent before

• Debit - Accounts Payable
• Credit - Cash