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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? a. The business must record this event, which would decrease cash and decrease equity on January 31. b. The business must record this event, which would decrease cash and increase equity on January 31. c. The business must record this event, which would increase liabilities and decrease equity on January 31. d. Because the bill is set aside for payment in February, there would be no effect on the accounting equation as of January 31.
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? a. The business must record this event, which would decrease cash and decrease equity on January 31. b. The business must record this event, which would decrease cash and increase equity on January 31. c. The business must record this event, which would increase liabilities and decrease equity on January 31. d. Because the bill is set aside for payment in February, there would be no effect on the accounting equation as of January 31.
Final answer:The event of receiving a bill should be accounted for in thecompany's books, increasing liabilities and decreasing equity in the accounting equation, even if the bill won't be paid until a later date.Explanation:The correct answer to this question is, 'c. The business must record this event, which would increaseliabilitiesand decrease equity on January 31'. Even though Jean plans to pay the bill on February 15, since Jean Consulting Company receives the bill on January 31, it must be accounted for in the January books. This increases the company's liabilities by $500. In the accounting equation (Assets = Liabilities + Equity), an increase in liabilities causes a decrease in equity if assets stay constant. Therefore, the bill impacts the accounting equation by increasing liabilities and decreasing equity.Learn more about Accounting Principles here:brainly.com/question/33720980#SPJ11...