The debt created by a business when it makes a purchase of inventory on account is a(n):
A)revenue.
B)account receivable.
C)note payable.
D)account payable.

Question

Quizplus · Accepted Answer

When a business purchases inventory on account, it is essentially buying goods on credit. The debt created by this transaction is recorded as an account payable, which is a liability on the balance sheet. Therefore, the correct answer is D, account payable.

The Debt Created by a Business When It Makes a Purchase