When a company makes a payment for amounts owed from prior purchases,it will record a debit to ______ and a credit to ______:
A) Accounts Payable; Cash
B) An expense; Cash
C) Accounts Payable; Retained Earnings
D) Cash; an expense

Question

Quizplus · Accepted Answer

When a company makes a payment for amounts owed from prior purchases, it will record a decrease or debit to Accounts Payable and an equal increase or credit to Cash. This reflects the payment of a liability with cash. Therefore, option A is the correct answer. Option B is incorrect because it suggests that the payment is an expense, which it is not. Option C is incorrect because it suggests that the payment is a distribution to shareholders, which is unlikely. Option D is incorrect because it suggests that the payment is an expense, which it is not.

When a Company Makes a Payment for Amounts Owed from Prior