A company received a utility bill for $1000 and decided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation?
A)Add $1000 to Utilities Expense and add $1000 to Cash.
B)Subtract $1000 from Cash and add $1000 to Accounts Payable.
C)Add $1000 to Accounts Receivable and subtract $1000 from Retained Earnings.
D)Add $1000 to Accounts Payable and subtract $1000 from Retained Earnings.

Question

Quizplus · Accepted Answer

The utility bill increases the company's liabilities (Accounts Payable) by $1000 and decreases equity (Retained Earnings) due to the expense incurred.

A Company Received a Utility Bill for $1000 and Decided