Asked by Neupane Saroj on Jul 27, 2024
Verified
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.
Supplies
Items used in the operation of a business that are consumed or not durable over a long period, such as office materials or cleaning supplies.
Liability
An obligation or debt that a company owes to others, which must be settled through the transfer of assets or services.
Expense
An economic outflow or the consumption of resources resulting from the operations of a business.
- Learn the correct procedure to record procurement and outlays, whether they are cash-based or accounted for on credit.
- Attain an understanding of the essence of asset, liability, capital, revenue, and expense accounts, including the balances they normally maintain.
Verified Answer
AV
ARCHANA VISWAMJul 27, 2024
Final Answer :
B
Explanation :
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).
Learning Objectives
- Learn the correct procedure to record procurement and outlays, whether they are cash-based or accounted for on credit.
- Attain an understanding of the essence of asset, liability, capital, revenue, and expense accounts, including the balances they normally maintain.