A business receives its bill for utilities for the current month that it plans to pay next month when the payment is due. This transaction causes:
A)an increase in both assets and owner's equity.
B)a decrease in both owner's equity and liabilities.
C)an increase in both assets and liabilities.
D)an increase in liabilities and a decrease in owner's equity.

Question

Quizplus · Accepted Answer

Receiving a bill for utilities that will be paid in the future increases liabilities (as the business now owes money) and decreases owner's equity (as expenses reduce the net income, which in turn reduces owner's equity).

A Business Receives Its Bill for Utilities for the Current