Multiple Choice
Which of the following best explains a journal (or daysheet) in financial accounting?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Which of the following transactions would appear on the debit side of the Accounts Payable T-account?
A
Payment to a supplier for a previous credit purchase
B
Accruing additional payables at year-end
C
Purchasing inventory on credit
D
Recording a purchase return to a supplier
Verified step by step guidance1
Understand the structure of a T-account: A T-account is a visual representation of an account in the ledger. The left side is the debit side, and the right side is the credit side.
Recall the nature of Accounts Payable: Accounts Payable is a liability account. It increases with credit entries (when a company owes more) and decreases with debit entries (when a company pays off its liabilities).
Analyze the transaction 'Payment to a supplier for a previous credit purchase': When a company pays a supplier for a previous credit purchase, it reduces its liability. This reduction is recorded as a debit in the Accounts Payable T-account.
Evaluate the other transactions: 'Accruing additional payables at year-end' increases liabilities, so it would appear on the credit side. 'Purchasing inventory on credit' also increases liabilities, appearing on the credit side. 'Recording a purchase return to a supplier' decreases liabilities, appearing on the debit side.
Conclude that transactions reducing Accounts Payable, such as payments to suppliers or purchase returns, appear on the debit side of the Accounts Payable T-account.
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