A firm paid cash to apply against a debt.To record this transaction,the accountant would
A) debit Accounts Receivable and credit Cash.
B) debit Accounts Payable and credit Cash.
C) debit Cash and credit Accounts Payable.
D) credit Cash and credit Accounts Payable.

Question

Quizplus · Accepted Answer

The firm paid cash to apply against a debt, which means they paid off a liability. The liability in this case would be recorded in Accounts Payable, so the accountant would debit Accounts Payable to decrease the liability and credit Cash to record the cash payment. Therefore, the correct option is B, which is to debit Accounts Payable and credit Cash.

A Firm Paid Cash to Apply Against a Debt