Asked by Tladi Kelefile karabelo on May 07, 2024
Verified
It's the end of the accounting period and no electric bill has been received (but the expense has been incurred) ; you should record an entry that:
A) increases the total revenue and increases the total expenses.
B) decreases the total assets and increases the total expenses.
C) increases the total liabilities and increases the total expenses.
D) decreases the total liabilities and increases the total expenses.
Electric Bill
A monthly statement charging for the consumption of electrical power provided by a utility company.
Total Expenses
The sum of all costs incurred by a business or individual in a specific period.
Total Revenue
The gross income generated from the core business activities of a company, including the sale of products and services.
- Gain an understanding of the basics and techniques for adjusting entries for accrued incomes and expenditures.
- Gain insight into the ramifications of adjusting entries on the balance sheet and income statement data.
Verified Answer
SP
Sapana Poudel
May 10, 2024
Final Answer :
C
Explanation :
The correct action is to record an adjusting entry that increases liabilities (for the electric bill payable) and increases expenses (for the electricity expense incurred). This reflects the obligation to pay the bill and the expense of using the electricity, even though the bill hasn't been received yet.
Learning Objectives
- Gain an understanding of the basics and techniques for adjusting entries for accrued incomes and expenditures.
- Gain insight into the ramifications of adjusting entries on the balance sheet and income statement data.