A business purchases supplies on account.The entry to record this transaction is:
A) Debit to Cash;Credit Supplies
B) Debit to Supplies;Credit Accounts Receivable
C) Debit Supplies;Credit Accounts Payable
D) Debit Supplies;Credit to Cash

Question

Quizplus · Accepted Answer

When a business purchases supplies on account, it means that they have received the supplies but have not yet paid for them. Therefore, the business would need to record a liability for the amount they owe. The entry to record this transaction is to debit Supplies (an asset account) as the business has received supplies, and credit Accounts Payable (a liability account) as the business now owes money for the supplies. Option A is incorrect as cash is not involved in this transaction. Option B is incorrect as Accounts Receivable is a credit account used to record money owed to the business, not by the business. Option D is incorrect as there is no cash involved in this transaction, so a cash account should not be debited.

A Business Purchases Supplies on Account