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

Question

Quizplus · Accepted Answer

When the owner writes a check to pay for the electric bill, the company's checking account balance will decrease (an asset) and the retained earnings (an owner's equity account) will also decrease. Therefore, both asset and owner's equity accounts will decrease, making option D the correct answer.

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