The purchase of an automobile involving a cash down payment and a promise to pay the balance in the future would include a debit to:
A)Note Payable and a credit to Cash.
B)Cash and a credit to Automobile.
C)Cash and a debit to Note Payable.
D)none of the above.

Question

Quizplus · Accepted Answer

The correct entry would be a debit to Automobile (asset increase) and a credit to Cash (asset decrease) for the down payment, and a credit to Note Payable (liability increase) for the balance owed.

The Purchase of an Automobile Involving a Cash Down Payment