Which Of The Following Statements Is Accurate Regarding Accounts Payable?
The effect of this entry on Accounting Equation is shown below:
Assets = Liabilities + Equity
+Supplies = +Accounts Payable
Both sides of the accounting equation are increasing, so the equation
remains in balance.
The option B is a wrong choice as this statement represents Accounts
Receivable / Sundry Debtors (money owed to the business by customer). It
shows the amount owed to business by customers who purchased products or services
on account / credit. From the business points of view, it is a Current Asset as
the customers did not pay to company for products or services sold on credit.
The option C represents a deposit of cash into checking account of company’
bank account. It shows an increase in bank account (current asset) and a credit
to cash account (current asset), which shows a Contra
Entry. So, this option is incorrect choice here.
The option D is also not correct statement as these are current liabilities, which are shown on liabilities & equity side on balance sheet, but not assets in accounting.
Comments