The Delivery Company has placed an order for $2,000 of supplies and intends to pay on account once the goods have been received.Transaction analysis requires the accounting clerk to,
A)record supplies as an asset on the order date,but wait to record the liability until supplies are received.
B)record supplies as an asset and credit accounts payable on the order date.
C)record supplies as an asset and debit accounts payable on the order date.
D)do nothing.

Question

Quizplus · Accepted Answer

Transaction analysis involves recognizing the effects of transactions on the accounting equation only when the transaction has actually occurred. In this case, since the goods have not been received, no transaction has occurred yet from an accounting perspective. Therefore, no entry is made until the goods are received and the company has an obligation to pay.

The Delivery Company Has Placed an Order for $2,000 of Supplies