A Company Received a Utility Bill for $500 and Decided

question 56

Multiple Choice

A company received a utility bill for $500 and decided to pay it next month due to a shortage of cash.In transaction analysis,how does this transaction affect the accounting equation?

• A)Add $500 to Utilities Expense account and add $500 to Cash account.
• B)Subtract $500 from Cash account and add $500 to Accounts Payable account.
• C)Add $500 to Accounts Receivable account and subtract $500 from Retained Earnings account.
• D)Add $500 to Accounts Payable account and subtract $500 from Retained Earnings account.

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Definitions:

Lenders

Individuals, organizations, or institutions that provide funds to borrowers under the agreement that the funds will be repaid with interest at a later date.

Fixed Incomes

Financial incomes that are set at a particular figure and do not fluctuate in the short term, such as bonds or pensions.

High Inflation

A period during which prices for goods and services rise excessively, eroding purchasing power.

Purchasing Power

The ability of an individual or group to buy goods and services, often considered in terms of the amount of goods and services that one unit of currency can buy.