Question

"Received $500 utility bill for this month, to be paid immediately" What are the accounts and how are their debits and credits affected?

Answer 1

When receiving a $500 utility bill that needs immediate payment, the accounts affected are Utilities Expense, which is debited, and Accounts Payable, which is credited with the same amount.

Step-by-step explanation:

The question pertains to accounting treatment for a utility bill that has been received and needs to be paid immediately. When a company receives a bill, it affects two accounts: Utilities Expense and Accounts Payable. The entry to record the utility bill would involve debiting Utilities Expense and crediting Accounts Payable.

The accounting entry would be as follows:

• Debit Utilities Expense: $500
• Credit Accounts Payable: $500

By debiting Utilities Expense, the company recognizes the expense it has incurred during the month. Conversely, by crediting Accounts Payable, it acknowledges the obligation to pay this amount in the future.