A business pays a creditor on account. The entry to record this transaction is:
A)Debit Cash; Credit Accounts Payable
B)Debit Accounts Receivable; Credit to Cash
C)Debit Accounts Receivable; Credit Accounts Payable
D)Debit Accounts Payable; Credit Cash

Question

Quizplus · Accepted Answer

When a business pays a creditor on account, it means that the business is making a payment towards the amount they owe to the creditor. This would result in a decrease in the liability account, Accounts Payable, and a decrease in the asset account, Cash. Therefore, the entry to record this transaction would be to debit Accounts Payable and credit Cash. Option D, Debit Accounts Payable; Credit Cash, is the best choice as it correctly reflects the decrease in both the liability and asset accounts.

A Business Pays a Creditor on Account