When a Company Receives a Utility Bill but Will Not

question 82

Multiple Choice

When a company receives a utility bill but will not pay it right away, it should

• A)debit utilities expense and credit accounts receivable.
• B)debit utilities expense and credit accounts payable.
• C)debit accounts payable and credit utilities expense.
• D)make no entry until the bill is paid.

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Definitions:

Gross Spread

The difference between the underwriting price received by the issuer of securities and the price at which the securities are sold to the public.

Oversubscription Privilege

A right given to current shareholders to purchase more shares of a new issue before it is offered to the public, usually at a discount.

Standby Privilege

A feature that may accompany preferred shares or bonds, allowing the holder the right to purchase additional shares at a fixed price.

Open Offer

An invitation by a company to its shareholders to purchase additional shares directly from the company at a specified price.