For the following transaction,identify the type of change that would have occurred in the accounting equation: Assets = Liabilities + Issued Capital + Opening retained profits + Revenue - Expenses - Dividends
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An electricity account was paid.There was no previous record of the charge.
A) An asset increased and another asset decreased.
B) An asset decreased and an expense increased.
C) An asset decreased and a liability decreased.
D) A liability increased and an expense increased.

Question

Quizplus · Accepted Answer

When an electricity account is paid, an asset (cash or bank) decreases and an expense (electricity expense) increases. This reduces the equity of the company (retained earnings) but there is no change in liabilities or issued capital. Therefore, the option "An asset decreased and an expense increased" (option B) is the correct answer.

For the Following Transaction,identify the Type of Change That Would