What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?
A)An expense would be debited and a liability credited.
B)Capital would be debited and Revenue credited.
C)An expense would be debited and an asset credited.
D)An asset would be debited and Capital credited.

Question

Quizplus · Accepted Answer

If the business received the telephone bill but did not pay it immediately, it would create a liability because the business owes the amount to the telephone company. Therefore, an expense (telephone charges) would be debited, and a liability (accounts payable) would be credited in the accounts. This follows the principle of accrual accounting, where expenses are recorded when incurred, not when paid.

What Would Be the Effect on the Accounts If the Business