To record the purchase of assets on account under the modified cash basis of accounting method,
A) debit the asset and credit Accounts Payable.
B) debit the asset and credit Cash.
C) debit Accounts Receivable and credit Accounts Payable.
D) debit Accounts Payable and credit the asset.

Question

Quizplus · Accepted Answer

Under the modified cash basis of accounting, the purchase of assets on account (meaning not paid for immediately with cash) is recorded by debiting the asset account to reflect the acquisition of the asset and crediting Accounts Payable to show the obligation to pay for the asset in the future.

To Record the Purchase of Assets on Account Under the Modified