Question

On January 14, Tamarisk, Inc. purchased supplies of $520 on account. The entry to record the purchase will include a debit to Supplies and a credit to Accounts Payable. a debit to Supplies expense and a credit to Accounts Receivable. a debit to Accounts Receivable and a credit to Supplies. a debit to Supplies and a credit to Cash.

Answer 1

Answer:

debit to supplies and credit to accounts payable.

Explanation:

On accrual accounting when an expense is incurred and revenue is earned it is recorded. The business does not have to give out cash or recieve cash to recognise the revenue or expense.

In this instance Tamarisk Inc recieved supplies worth $520. Although they had not paid cash for it the liability needs to be recorded.

When one buys on account it means product is bought on credit and is payable later.

The entry passed is a debit to supply account (asset account) to recognise increase in supplies, and a credit to accounts payable (liability account) to show an increase in money owed to the supplier.