Modern Artists' Services Signed a Contract with a Maintenance Service

question 188

Multiple Choice

Modern Artists' Services signed a contract with a maintenance service company to maintain a building that Modern Artists' will use as an office.The contract states that the work will begin on February 1 and end on May 31.Modern Artists' will pay the maintenance service company $8,000 at the end of May.It accrues Maintenance Expense at the end of every month.What is the balance in the Accounts Payable account for amounts owed to the maintenance service company at the end of March?

• A) Debit balance of $8,000
• B) Credit balance of $4,000
• C) Debit balance of $4,000
• D) Credit balance of $8,000

---

Definitions:

Equipment

Physical assets used in the operation of a business, such as machinery, computers, and furniture.

Cash

Represents money or its equivalents (such as checks) that a company possesses and can use for transactions.

Withdrawals

Money or assets taken from a business by its owner(s) for personal use, typically reducing the total equity.

Cash

Liquid currency and assets readily convertible to currency, used by businesses to conduct transactions.