Which of the Following Entries Records the Receipt of a Utility

question 208

Multiple Choice

Which of the following entries records the receipt of a utility bill from the water company?

• A) debit Utilities Expense; credit Accounts Payable
• B) debit Utilities Payable; credit Accounts Receivable
• C) debit Accounts Payable; credit Cash
• D) debit Accounts Payable; credit Utilities Payable

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Definitions:

Variable Costing

An accounting method that only considers variable costs (costs that vary with the level of output) when calculating the cost of goods sold and production.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product.

Net Operating Income

Represents the difference between operating revenues and operating expenses.

Common Fixed Expenses

Expenses that do not vary with the level of production or sales, shared among different business segments or products.