What Would Be the Effect on Accounts If the Business

question 104

Multiple Choice

What would be the effect on accounts if the business received the telephone bill but did not pay it immediately?

• A) An expense would be debited and a liability credited.
• B) Capital would be debited and revenue credited.
• C) An expense would be debited and an asset credited.
• D) An asset would be debited and Capital credited.

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Definitions:

Income

The financial gain earned or received by an individual or entity, usually through work, investments, or other forms of economic activities.

Expected Utility

A concept in economics and finance that represents the total utility that an entity expects to gain under uncertain conditions.

Insurance Premium

The sum of money required to be paid by a person or company for obtaining an insurance coverage.

Risk-Averse

A description of an individual or entity that prefers to avoid risk, choosing safer options over potentially higher-reward alternatives.