What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?
A) An expense would be debited and an asset credited.
B) Capital would be debited and Revenue credited.
C) An expense would be debited and a liability credited.
D) An asset would be debited and Capital credited.

Question

Quizplus · Accepted Answer

When a business receives a telephone bill but does not pay it immediately, it incurs an expense (telephone expense) that increases its expenses for the period, which is debited. At the same time, it creates a liability (accounts payable) because the bill is an obligation to pay in the future, which is credited. This reflects the accrual basis of accounting, where expenses are recognized when incurred, not necessarily when paid.

What Would Be the Effect on the Accounts If the Business