It's the end of the accounting period and no electric bill has been received (but the expense has been incurred); you should record an entry that:
A) increases the total revenue and increases the total expenses.
B) decreases the total assets and increases the total expenses.
C) increases the total liabilities and increases the total expenses.
D) decreases the total liabilities and increases the total expenses.

Question

Quizplus · Accepted Answer

The correct action is to record an adjusting entry that increases liabilities (for the electric bill payable) and increases expenses (for the electricity expense incurred). This reflects the obligation to pay the bill and the expense of using the electricity, even though the bill hasn't been received yet.

It's the End of the Accounting Period and No Electric