When delivery equipment is purchased on account,the transaction to be entered by the purchaser includes
A) debiting Delivery Equipment and crediting Accounts Payable.
B) debiting Delivery Expense and crediting Cash.
C) debiting Delivery Expense and crediting Accounts Payable.
D) debiting Delivery Equipment and crediting Cash.

Question

Quizplus · Accepted Answer

When delivery equipment is purchased on account, it means that the purchaser has not paid for it yet and owes money to the supplier. Therefore, the purchaser needs to credit Accounts Payable, which represents the amount owed to the supplier, and debit Delivery Equipment, which represents the acquisition of the asset. Option B is incorrect because Delivery Expense represents the cost of shipping goods to customers, not the purchase of equipment. Option C is incorrect because it credits Delivery Expense, which is not appropriate for a purchase transaction. Option D is incorrect because it credits Cash, which is not involved in a purchase on account.

When Delivery Equipment Is Purchased on Account,the Transaction to Be