Which of the following entries correctly records the receipt of an electricity bill from the power company?
A) Dr Electricity expense
Cr Accounts payable
B) Dr Electricity payable
Cr Accounts payable
C) Dr Accounts payable
Cr Electricity expense
D) Dr Accounts payable
Cr Electricity payable

Question

Quizplus · Accepted Answer

When a company receives an electricity bill, it increases its expenses for electricity (a debit to Electricity Expense) and increases its liabilities because it now owes money to the power company (a credit to Accounts Payable). This accurately reflects the transaction's impact on the company's financial statements.

Which of the Following Entries Correctly Records the Receipt of an Electricity