What is the correct journal entry when Bob takes the company vehicle for an oil change?

The correct journal entry when Bob takes the company vehicle for an oil change reflects the expense incurred for the maintenance service. By debiting Maintenance Expense, the company recognizes the cost associated with the oil change as an expense in its accounting records, which properly reflects the use of resources in that period. This accounting practice adheres to the matching principle, where expenses are recorded in the same period as the revenues they help generate.

The credit to Accounts Payable indicates that the company has incurred a liability for the service received but has not yet paid for it, thereby accurately portraying the company's obligations. This entry captures both the increase in expenses and the corresponding liability that the company will settle in the future.

Recognizing the costs through this entry ensures that the financial statements reflect an accurate picture of the company’s financial position, including both expenses and liabilities.