A company purchased and received $3,500 worth of goods on credit to be sold in their stores. How would the event be recorded?

Question

Quizplus · Accepted Answer

When a company purchases goods on credit to be sold, the transaction increases inventory and creates a liability. The correct entry is to debit Inventory for the purchase amount and credit Accounts Payable for the same amount, reflecting the increase in assets and liabilities respectively.

A Company Purchased and Received $3,500 Worth of Goods on Credit