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

Question

Quizplus · Accepted Answer

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.

The Debt Created by a Business When It Makes a Purchase