Essentially, what you are doing is moving the amount from one official account to another. The debit to Telephone Expense is recording the expense The credit to Accounts payable is setting that same amount up as an amount to be paid at a later date. When the expense is actually paid, Accounts Payable will be debited and the Cash account will be credited. Debit and credit comes from the Latin meaning from the right and from the left, respectively. Debits and credits are a fundamental tool of international accounting. You may want to look up the definitions of debits and credits: http://en.wikipedia.org/wiki/Debits_and_credits