Which of the Following Entries Records the Payment of a Bill

question 45

Multiple Choice

Which of the following entries records the payment of a bill for your insurance premium?

• A) debit Prepaid Insurance; credit Cash
• B) debit Insurance Payable; credit Accounts Receivable
• C) debit Accounts Payable; credit Cash
• D) debit Cash; credit Prepaid Insurance

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Definitions:

Raw Materials

The basic materials and substances that are used in the initial stages of production and manufacturing.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Book Value Per Share

A financial measure that indicates the value of a company's equity as represented in its shares, calculated by dividing total shareholders' equity by the number of outstanding shares.

Market Price

The current price at which an asset or service can be bought or sold.