Question

Cash was paid by Janer's Cleaning Service to creditors on account. Which of the following entries for Janer's Cleaning Service records this transaction? a.Accounts Receivable, debit; Cash, credit b.Accounts Payable, debit; Accounts Receivable, credit c.Cash, debit; Common Stock, credit d.Accounts Payable, debit; Cash, credit

Answer 1

Answer:

The correct answer is b. Accounts Payable, debit; Accounts Receivable, credit.

Explanation:

Accounts payable (AP) represent the amount due on a specific date for the purchase of products or services. Accounts payable are recorded at the time an invoice is approved for payment and are recorded in the General Ledger (or in the CP auxiliary ledger) as a liability, pending payment or open because it has not been settled . Accounts payable are generally classified as Commercial Accounts Payable (that is, payable for the purchase of physical goods that are recorded as Inventory), and Accounts Payable for various Expenses (that is, payable for the purchase of goods and services that are billed). Some common examples of Expense Accounts Payable are advertising, travel, entertainment, office supplies, and services. CPs are a form of credit that providers offer their customers by allowing them to pay for a product or service after it has been received.

Accounts receivable represent collection rights expected to be received in cash. Accounts receivable represent amounts owed by entities to a company for the sale of products and services. In most commercial entities, accounts receivable are normally generated by issuing an invoice and sending it to the customer by mail or electronically, and the customer, in turn, must settle it within a set period of time called credit terms or payment terms.