When should bill be recorded in books of accounts

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Sandeep Julka (Querist)
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17 February 2017 I have a query as to when a Bill should be recorded in the Books of Accounts.

Example:
Bill Received on 01/12/2016
Bill approved by CFO on 01/01/2017
Payment made on 01/02/2017.

ACS Shilpa Baheti

ACS Shilpa Baheti (Expert)
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17 February 2017 Journal Entry should be made on the date of bill received. However the payment entry to be recorded on 01-02-17.

Sandeep Julka

Sandeep Julka (Querist)
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17 February 2017 What if the bill dated 01/12/2016 is received on 05/12/2016 and approved internally on 01/01/2017 by CFO. When should ot be recorded.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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03 August 2025 Great question! Here’s the standard accounting practice:

Bill Recording Timing:

Generally, expenses should be recorded when the liability is incurred (i.e., when the goods/services are received), not when the bill is approved or paid.

So, if the bill is for services/goods received on 01/12/2016, then the expense and liability should be recorded in December 2016 books, even if you received the bill on 05/12/2016 or it was approved later on 01/01/2017.

Why?

Accrual accounting principle: expenses are recognized when incurred, not when paid.

This gives a true and fair view of financials in the period expenses belong to.

Journal entries:

On 01/12/2016 (date of liability or receipt of goods/services):
Dr. Expense A/c
Cr. Accounts Payable / Bills Payable A/c

On 01/02/2017 (date of payment):
Dr. Accounts Payable / Bills Payable A/c
Cr. Cash/Bank A/c

Summary:
You should record the bill in December 2016 books, even if bill receipt or approval is delayed.

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