A Company Received a Utility Bill for $1000 and Decided

question 63

Multiple Choice

A company received a utility bill for $1000 and decided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation?

• A)Add $1000 to Utilities Expense and add $1000 to Cash.
• B)Subtract $1000 from Cash and add $1000 to Accounts Payable.
• C)Add $1000 to Accounts Receivable and subtract $1000 from Retained Earnings.
• D)Add $1000 to Accounts Payable and subtract $1000 from Retained Earnings.

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Definitions:

Total Direct Cost

The sum of all direct costs associated with the production of goods or the provision of services, including direct materials and direct labor.

Departments

Departments refer to distinct segments within an organization, each with specific responsibilities and roles, meant to streamline operations and improve efficiency.

Expenses

Costs incurred by a business in the process of earning revenue.

Indirect Costs

Costs that are not directly traceable to a specific product or service but are necessary for the operation of a business, such as overhead expenses.