Crystal Clear Imagery received and paid a utility bill for $300 for the month of November.This transaction will:
A)increase Cash and increase Utility Expense.
B)decrease Cash and increase Utility Expense.
C)increase Cash and decrease Utility Expense.
D)increase Utility Expense and decrease revenue.

Question

Quizplus · Accepted Answer

When a business pays a utility bill, its Cash account decreases (because the business is using cash to pay the bill) and its Utility Expense account increases (because the business is now recognizing the expense incurred for using the utilities during the month). Therefore, option B is correct. Option A is incorrect because it suggests that the Cash account will increase (which is not the case as cash is paid out), while Utility Expense will increase (which is correct). Option C is incorrect because it suggests that both Cash and Utility Expense accounts will increase, which is not the case as one account is debited (Cash) and the other account is credited (Utility Expense). Option D is incorrect because the transaction has no impact on revenue.

Crystal Clear Imagery Received and Paid a Utility Bill for $300