What Would Be the Effect on Accounts If the Business

question 104

Multiple Choice

What would be the effect on 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.

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Definitions:

Lump Sum

A one-time transaction conducted at a specific moment, rather than multiple smaller payments or installments.

Ordinary Annuity

Consecutive settlements of equal value made at the end of each period over an established length of time.

Annuity Due

A financial product that pays out a series of payments at the beginning of each period, such as monthly or annually.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, commonly used to appraise long-term projects.