The journal entry to record taking a discount when paying for goods previously purchased on account:
A)decreases assets and liabilities.
B)increases assets and stockholders' equity.
C)decreases liabilities and increases in stockholders' equity.
D)decreases assets and stockholders' equity.

Question

Quizplus · Accepted Answer

The journal entry includes a debit to Accounts Payable for the original cost (to decrease this liability account)and a credit to Cash for the discounted amount (to decrease this asset account)and Inventory for the amount of the discount (to decrease this asset account).

The Journal Entry to Record Taking a Discount When Paying