A liability would be credited and an expense debited if
A) the business paid a creditor.
B) the business incurred an expense and did not pay the expense immediately.
C) the business bought supplies on account.
D) the business bought supplies for cash.

Question

Quizplus · Accepted Answer

When a business incurs an expense but does not pay it immediately, a liability is created (as the business owes money to the creditor) and an expense is incurred (as the benefit of the expense has been received). Therefore, a liability would be credited and an expense debited in this situation. Option A is incorrect because it simply involves paying off a liability, which does not involve creating a new liability or expense. Option C involves buying supplies on account, which creates a liability but not an expense. Option D involves buying supplies for cash, which does not create a liability.

A Liability Would Be Credited and an Expense Debited If