When a business receives an invoice for electricity, it should:

a. debit Electricity expense and credit Accounts payable

b. debit Electricity expense and credit Accounts receivable

c. debit Accounts payable and credit Electricity expense

d. make no entry until the bill is paid

e. debit Prepaid electricity expense and credit Cash

If the general ledger of the New Age Cinema shows a debit to Prepaid Insurance of $1000 for the period and a credit to Cash of $1000 which transaction has been recorded?

a. Received a refund for an insurance policy that has been cancelled

b. Paid $1000 for an insurance policy that will expire within the next 12 months

c. A customer paid $1000 from an insurance from New Age Cinema

d. None of the other options are correct

e. Paid $1000 for the insurance expense

Which of these rules is incorrect?

a. Credits decrease the drawing account

b. Debits increase the capital account

c. Credits increase revenue accounts

d. Debits decrease liability accounts

e. None of the rules given in the other options are incorrect

Noland Company purchases equipment for $1200 and supplies for $400 from Sanders Co for $1600 cash. For Noland Company, the journal entry to record this transaction is:

a. DR Equipment $400; DR Supplies $1200 and CR Cash $1600

b. DR Cash $1600; CR Equipment $1200; and CR Supplies $400

c. DR Equipment $1200; DR Supplies $400; and CR Cash $1600

d. DR Cash $1200; DR Supplies $400; and CR Equipment $1600

e. DR Equipment $1600; and CR Cash $1600

Answer rating: 100% (QA)

The solution to Question 1rn Option a debit Electricity expense and credit Accounts pa... View the full answer