A company purchases $23,000 of supplies in the current month and promises to pay for them next month.How would the company record a liability for the supplies?

Question

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Accounts Payable is the liability account used to record promises to pay for goods or services received on credit. Therefore, $23,000 would be posted as a credit to Accounts Payable to record the liability for the supplies. Option A is incorrect because the liability is recognized when the promise is made, not when the payment is due. Option C is incorrect because a debit to Accounts Payable would increase the company's accounts payable balance, creating a liability, while a debit to Note Payable would create a liability for a long-term borrowing arrangement, which is not the case in this scenario.

A Company Purchases $23,000 of Supplies in the Current Month