The business incurred an expense and paid it immediately.To record this:
A)an expense is debited and a liability is credited.
B)an expense is debited and an asset is credited.
C)an asset is debited and asset is credited.
D)None of these is correct.

Question

Quizplus · Accepted Answer

When a business incurs an expense and pays it immediately, it is recorded by debiting the expense account and crediting the asset account for the cash paid. This is because the business has decreased its assets (cash) to pay for the expense, which is why an asset account must be credited in the transaction. A liability account is not involved since the business has already paid for the expense and does not owe any money.

The Business Incurred an Expense and Paid It Immediately