Which of the following would result if the business purchased supplies on credit?
A) Supplies would increase and Cash would decrease.
B) Supplies would increase and Capital would increase.
C) Supplies would increase and Accounts Payable would increase.
D) The purchase of supplies is not a business transaction.

Question

Quizplus · Accepted Answer

Purchasing supplies on credit means that the business is receiving the supplies but not paying for them immediately. This creates a liability for the business called Accounts Payable, which increases by the amount of the purchase. At the same time, supplies increase since the business has received them. There is no change in cash or capital because no money has been exchanged yet. Therefore, choice C is the correct answer.

Which of the Following Would Result If the Business Purchased