Paid $12,000 cash for account previously owed to cleaning equipment suppliers.

Question

BlackTom AI · Accepted Answer

Question restatement: The scenario describes paying $12,000 in cash to settle an amount owed to cleaning equipment suppliers (accounts payable).
Option 1: 'Dr. Accounts Payable      12,000        Cr. Cash      12,000' This entry decreases the liability (Accounts Payable) and decreases the asset (Cash) by the same amount, which is the typical double-entry for paying off a supplier invoice.
Option 2: 'Dr. Accounts Receivable     12,000        Cr. Cash      12,000' This would record a collection from a customer, not a payment to a supplier. It incorrectly affects Accounts Receivable, which is not involved in this transaction.
Option 3: 'Dr. Cash      12,000        Cr. Accounts Payable      12,000' This reverses the normal effect: it would increase Cash instead of decreasing it while also decreasing a liability, which does not reflect paying off what you owe and would violate the principle that cash should decrease when you pay a liability.
Option 4: 'None of the above' This option would only be correct if none of the entries matched the transaction; however, Option 1 accurately reflects paying a liability with cash, making this option inappropriate.
In summary, the transaction is a reduction of both a liability (Accounts Payable) and an asset (Cash) by the same amount, which aligns with standard accounting for paying on account. The other options misstate the involved accounts or the direction of the effects on assets and liabilities.

Paid $12,000 cash for account previously owed to cleaning equipment suppliers.Single choice

Similar Questions

True or False? Accounts payable represents money that is owed to a business.

If accounts payable increase during an accounting period, then the cash paid for merchandise purchased is less than the merchandise purchases for the period.

What is a current liability that results when a business does not pay cash when the asset is purchased?

Accounts payable represent money that a firm owes to ________.

What is the Invoice Count for Period 01 for Vendor Group SUP, as determined in Step 9?

In the A/P Post Batches form, which of the following types of batches can you not post?

What is the purpose of posting adjustment batches in the Accounts Payable module immediately after they have been reviewed for errors and printed? Select the best answer.

Which of the following is a method to process payments in Accounts Payable?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler