How Does Receiving a Bill to Be Paid Next Month

question 108

Multiple Choice

How does receiving a bill to be paid next month for services received affect the accounting equation?

• A) assets decrease; owner's equity decreases
• B) assets increase; liabilities increase
• C) liabilities increase; owner's equity increases
• D) liabilities increase; owner's equity decreases

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.

Total Liabilities

The sum of all debts and financial obligations a company owes to outside parties.

Total Assets

The sum of all resources owned by a company or an individual, valued in monetary terms, which includes tangible and intangible items.

Net Income

The total earnings of a company after subtracting all expenses and taxes from the total revenue.