A firm paid cash to apply against a debt. To record this transaction, the accountant would:
A)credit Cash and credit Accounts Payable.
B)debit Accounts Payable and credit Cash.
C)debit Accounts Receivable and credit Cash.
D)debit Cash and credit Accounts Payable.

Question

Quizplus · Accepted Answer

When a firm pays cash to apply against a debt, it means that they are paying off an accounts payable. To record this transaction, the accountant should debit Accounts Payable (to decrease the liability) and credit Cash (to decrease the asset). Therefore, the correct option is to debit Accounts Payable and credit Cash.

A Firm Paid Cash to Apply Against a Debt