Able Graphics Received a $400 Utility Bill for the Current $$\begin{array} { | l | l | l | } \hline \text { No journal entry is required } & & \\\hline & & \\\hline\end{array}$$

question 176

Multiple Choice

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

• A) \[\begin{array} { | l | l | l | }
• \hline \text { No journal entry is required } & & \\
• \hline & & \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Utilities Expense } & 400 & \\
• \hline \text { Cash } & & 400 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Utilities Expense } & 400 & \\
• \hline \text { Accounts Payable } & & 400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 400 & \\
• \hline \text { Utilities Expense } & & 400 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 400 & \\
• \hline \text { Utilities Expense } & & 400 \\
• \hline
• \end{array}\]

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Definitions:

Direct Labor

The labor costs associated with employees who directly contribute to the production of goods or the provision of services.

Straight-line Depreciation

A method of allocating an asset’s cost evenly across its useful life.

Break-even Point

The volume of sales at which total revenues equal total costs, resulting in zero profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services a business produces.