When A Business Pays Cash On Account, A Liability Account Is What?

If A Business Pays Cash / Bank On Account Then A Liability Account Is Decreased By A Debit

When a business pays cash / bank on account / credit, then a Liability Account is decreased by a debit.

For example, Mr. A is a sole proprietor of his own business. He paid cash of Rs. 10000 to supplier or vendor for merchandise purchased on account. What is the journal entry to show decrease in liability account.

When, goods purchased on account, we debit Purchases Account and credit Accounts Payable Account. As the business pays cash for goods purchased on account, so we record the following entry as shown below:

                                                         Accounts Payable a/c  10000

 

                                                                                                  Cash a/c  10000

 

                                                                                   (Paid Cash To Vendors)

Accounts payable as a Current Liability is decreasing as we paid cash to vendor.