Multiple Choice
A debit is used to record which of the following?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Which of the following journal entries correctly records the purchase of office supplies for $500 cash during July?
A
Debit Accounts Payable $500; Credit Cash $500
B
Debit Cash $500; Credit Office Supplies $500
C
Debit Office Supplies $500; Credit Cash $500
D
Debit Office Supplies $500; Credit Accounts Payable $500
Verified step by step guidance1
Understand the nature of the transaction: The purchase of office supplies for $500 cash means the company is acquiring office supplies and paying for them immediately using cash.
Identify the accounts involved: The accounts affected are 'Office Supplies' (an asset account) and 'Cash' (another asset account).
Determine the impact on each account: The 'Office Supplies' account increases because the company is acquiring supplies, and the 'Cash' account decreases because cash is being used to pay for the supplies.
Apply the rules of debits and credits: An increase in an asset account (Office Supplies) is recorded as a debit, and a decrease in an asset account (Cash) is recorded as a credit.
Write the journal entry: Debit 'Office Supplies' for $500 and Credit 'Cash' for $500 to correctly record the transaction.
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