A company purchased and received $2,500 worth of goods on credit to be sold in their stores.How would the event be recorded?

Question

Quizplus · Accepted Answer

When goods are purchased on credit, an accounts payable is created. Therefore, the event should be recorded as a debit to inventory (asset account) and a credit to accounts payable (liability account). Option A is incorrect because expenses should not be recorded at this time. Option B is incorrect because expenses would only be recorded when the goods are sold or used. Option D is incorrect because the event should be recorded at the time the goods are received.

A Company Purchased and Received $2,500 Worth of Goods on Credit