When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Question

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When a business receives a bill from the utility company, an accrual should be recorded for the expense even if the invoice is not yet paid. This is necessary to properly match expenses with revenues on the income statement. Once the bill is paid, the accounts payable account is reduced and the cash account is increased to reflect the payment.

When a Business Receives a Bill from the Utility Company