The business bought supplies on account. To record this:
A) an expense is debited and a liability is credited.
B) an asset is debited and a liability is credited.
C) an asset is credited and a liability is credited.
D) None of the above answers are correct.

Question

Quizplus · Accepted Answer

When a business buys supplies on account, it means the supplies are bought now but will be paid for later. This transaction increases supplies (an asset) and also increases accounts payable (a liability). Therefore, the correct entry is to debit the asset account (supplies) and credit the liability account (accounts payable).

The Business Bought Supplies on Account