When the owner writes a company check to pay the firm's electric bill,
A) assets and owner's equity increase.
B) assets decrease and expenses increase.
C) assets and liabilities decrease.
D) expenses increase and owner's equity increases.

Question

Quizplus · Accepted Answer

Writing a check to pay for an expense, such as the electric bill, results in a decrease in assets (the balance in the bank account decreases) and an increase in expenses (recorded in the income statement). There is no change in owner's equity, assets and liabilities are not affected by this transaction.

When the Owner Writes a Company Check to Pay the Firm's