Question

Which of the following is a true statement?

A.Clients making payments on their accounts receivable will increase assets and increase revenues.
B.An owner's contribution of cash to a company increases liabilities.
C.A cash withdrawal from the company decreases owner's equity.
D.Paying off an electric bill recorded last month as an expense increases assets and decreases accounts payable.

Answer 1

The true statement among the given options is that paying off an electric bill recorded last month as an expense increases assets and decreases accounts payable.

Step-by-step explanation:

The true statement among the given options is D. Paying off an electric bill recorded last month as an expense increases assets and decreases accounts payable.

When you pay off an electric bill that was previously recorded as an expense, it decreases the liability account called accounts payable, as the company no longer owes money for the bill. At the same time, it increases the asset account, such as the cash account, as the company is using its cash to pay off the bill.