Final answer:
The two accounts affected when a business receives a utility bill are Utilities Expense and Accounts Payable, with a debit to the former and a credit to the latter.
Step-by-step explanation:
When a business receives a bill for utilities expense, the two accounts that are affected are Utilities Expense and Accounts Payable. The Utilities Expense account is an income statement account representing the cost of utilities consumed by the business and increases with a debit. Accounts Payable is a liability on the balance sheet, representing the amount the business owes to the utility provider, and it increases with a credit.
The journal entry to record the utility expense would be a debit to Utilities Expense and a credit to Accounts Payable. Upon receiving the bill, the business acknowledges the expense; hence, the Utilities Expense account increases (debit). Conversely, because the bill has not yet been paid, the liability is recognized through an increase (credit) in Accounts Payable. This transaction does not involve cash, but it does affect the business's financial position.
In the provided scenario, Noel's attentiveness prevented a potential overpayment of $250,000. This situation illustrates the importance of proper accounting checks and the role of employees in safeguarding the financial health of a company. This is also an example of why understanding the future implications of transactions is essential in business operations.