Asked by ricardo caraballo on May 17, 2024
Verified
The debt created by a business when it makes a purchase on account is referred to as an
A) account payable
B) account receivable
C) asset
D) expense payable
Account Payable
The sum of funds that a business needs to pay back to its vendors or lenders for products or services bought on a credit basis.
Account Receivable
Debts owed by customers to a company for items or services that have been dispatched but not compensated.
Asset
Assets held by a company or person anticipated to yield economic advantages in the future.
- Absorb the principles of logging and communicating business transactions and their impact on financial reports.
Verified Answer
OM
Orlando MartinezMay 19, 2024
Final Answer :
A
Explanation :
When a business makes a purchase on account, it is essentially borrowing money to finance the purchase. The debt created in this situation is known as an "account payable," which is a liability on the company's balance sheet. This is because the company owes money to its supplier, and that debt must be paid off in the future. Therefore, the correct answer is A) account payable.
Learning Objectives
- Absorb the principles of logging and communicating business transactions and their impact on financial reports.