A Business Receives Its Bill for Utilities for the Current

question 151

Multiple Choice

A business receives its bill for utilities for the current month that it plans to pay next month when the payment is due. This transaction causes:

• A)an increase in both assets and owner's equity.
• B)a decrease in both owner's equity and liabilities.
• C)an increase in both assets and liabilities.
• D)an increase in liabilities and a decrease in owner's equity.

Comprehend the importance of matching expenses with revenues in the correct accounting period.

Understand the purpose and process of adjusting entries in the accounting cycle.

Determine the correct adjusting entries for prepaid expenses, supplies, and accrued revenues.

Identify how adjusting entries affect financial statement accounts and financial statements.

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Definitions:

Income Effect

The change in an individual's or economy's purchasing power due to a change in income, affecting the quantity of goods and services bought.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource.

Dual Labor Market Theory

An economic theory that suggests the labor market is divided into two segments: the primary market, with secure, well-paid jobs, and the secondary market, characterized by low pay, job insecurity, and little room for advancement.

Backward-Bending

Refers to the backward-bending supply curve of labor, indicating that at some point, higher wages lead to a decrease in the labor supply.