On October 3, Ken Steele, a Carpenter, Received a Cash

question 217

Multiple Choice

On October 3, Ken Steele, a carpenter, received a cash payment for services previously billed to a client. Ken paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a

• A) credit to Owner's Capital.
• B) debit to Notes Payable.
• C) debit to Accounts Receivable.
• D) credit to Accounts Payable.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.

Retained Earnings Account

An equity account on the balance sheet that represents the accumulated net income of a company that has not been distributed to shareholders as dividends.

Dividends Account

An account in the ledger that records dividends paid out to shareholders by a company.

Retained Earnings Account

An equity account that represents the accumulated portion of net income not distributed to shareholders in the form of dividends.