The purchase of equipment on credit is recorded by a:
A)Debit to Equipment and a credit to Accounts Payable.
B)Debit to Accounts Payable and a credit to Equipment.
C)Debit to Equipment and a debit to Accounts Payable.
D)Credit to Equipment and a credit to Accounts Payable.

Question

Quizplus · Accepted Answer

When equipment is purchased on credit, the Accounts Payable account is increased, indicating that the company owes money to the vendor. At the same time, the Equipment account is increased to indicate the company's ownership of the asset. Therefore, the correct entry in the accounting system is a debit to Equipment and a credit to Accounts Payable.

The Purchase of Equipment on Credit Is Recorded by A