Asked by ariana marie on Jun 10, 2024
Verified
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 an asset credited.
B) Capital would be debited and Revenue credited.
C) An expense would be debited and a liability credited.
D) An asset would be debited and Capital credited.
Telephone Bill
A monthly statement charging an individual or company for the use of telephone services.
Expense
An outflow of cash or other valuable assets that a business incurs as a result of its operations intended to generate revenue.
Liability
Financial obligations or debts that a company owes, which are settled over time through the transfer of economic benefits including money, goods, or services.
- Ascertain the proper technique for logging buys and expenditures, regardless of payment through cash or on credit.
- Acquire knowledge about the features of asset, liability, capital, revenue, and expense accounts and their usual balances.
Verified Answer
TW
Thomas WallaceJun 12, 2024
Final Answer :
C
Explanation :
When a business receives a telephone bill but does not pay it immediately, it incurs an expense (telephone expense) that increases its expenses for the period, which is debited. At the same time, it creates a liability (accounts payable) because the bill is an obligation to pay in the future, which is credited. This reflects the accrual basis of accounting, where expenses are recognized when incurred, not necessarily when paid.
Learning Objectives
- Ascertain the proper technique for logging buys and expenditures, regardless of payment through cash or on credit.
- Acquire knowledge about the features of asset, liability, capital, revenue, and expense accounts and their usual balances.