Utilities Expenses

What are Utilities Expenses?

Utilities Expenses are cost incurred by the company for using the services of public utility companies like sewage, electricity, waste disposal, water, broadband, heating, telephone, and usually, these costs make up a significant portion of the opex for almost all businesses.

Examples

For Example, the accountant of the Company Y ltd is confused that what are all the expenses out of the below mentioned incurred expenditure for August 2019 should be treated as the utilities expenses of the company for the period or not. Calculate the total value of utilities expenses out of the total below mentioned expenses of the company during the period:

  • Telephone Bills: $1,000
  • Gas Bill: $500
  • Rent Expenses: $2,400
  • Salary Paid: $150,000
  • Electricity Expenses: $1,100
  • Water Charges: $350

Solution:

Utilities Expenses are the cost which the company incurs during a period to avail the services provided by the public utility companies in the place of operation of the company like the telephone facility, electricity, gas, water, sewer, etc. Out of the expenses mentioned above, Telephone bills, Gas Bill, Electricity expenses and water charges will be considered, as these are the services for which the infrastructure provided by the public utility companies are used. For the rest of the expenses, i.e., rent and salary, there is no use of the services provided by the public utility companies, so they will not be considered.

Utilities Expenses Example 1-1

  • Total Utilities Expenses = Telephone bills + Gas Bill + Electricity expenses + Water charges
  • = $ 1,000 + $ 500+ $ 1,100 + $ 350
  • = $ 2,950

Important Points

Conclusion

Utilities Expenses in accounting are the cost which the company incurs during a period to avail the services provided by the public utility companies in the place of operation of the company like the telephone facility, electricity, gas, water, sewer, etc. These expenses incurred in the accounting period are calculatedAccounting Period Are CalculatedAccounting Period refers to the period in which all financial transactions are recorded and financial statements are prepared. This might be quarterly, semi-annually, or annually, depending on the period for which you want to create the financial statements to be presented to investors so that they can track and compare the company's overall performance.read more by the company, and the same remains as the liability until the company makes the payment of the same to the respective service provider. Most of the utilities are the basic utilities without which the organization will not be able to continue its operations and thus plays an essential part in the working of the organization.

Recommended Articles

This article has been a guide to Utilities Expenses. Here we discuss the example of Utilities Expenses in accounting such as telephone bills, gas bills, electricity bills, etc. along with advantages and disadvantages. You can learn more about accounting from the following articles –

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