References

Knowledge Check $01$

On January $31,$ Jean Consulting Company receives a bill for that month's utilities in the amount of $$500.$ Jean sets it aside because she does not plan to pay the bill until its due date of February $15.$ What effect, if any, does this event have on the company's accounting equation as of January $31?$

The business must record this event, which would decrease cash and decrease equity on January $31.$

The business must record this event, which would decrease cash and increase equity on January $31.$

The business must record this event, which would increase liabilities and decrease equity on January $31.$

Because the bill is set aside for payment in February, there would be no effect on the accounting equation as of January $31.$