An accountant has debited an asset account for $1,300 and credited a liability account for $500. Which of the following would be an incorrect way to complete the recording of the transaction?
A) Credit an asset account for $800.
B) Credit another liability account for $800.
C) Credit a Stockholders' account for $800.
D) Debit a Stockholders' account for $800.

Question

Quizplus · Accepted Answer

Debiting a Stockholders' account for $800 would not be an appropriate way to complete the recording of the transaction as it does not match the initial debit to the asset account. The correct way to complete the transaction would be to credit an asset account for $800 (Option A) or credit another liability account for $800 (Option B), as this would balance out the initial debit to the asset account and the credit to the liability account. Crediting a Stockholders' account for $800 (Option C) would also not be appropriate as it would increase the equity of the company without any actual contribution of resources.

An Accountant Has Debited an Asset Account for $1,300 and Credited