A company paid $200 cash for supplies that were purchased last month. However, the company recorded a debit to Accounts Payable

Question

Vesna [10]

2 years ago

15

A company paid $200 cash for supplies that were purchased last month. However, the company recorded a debit to Accounts Payable

of $200 and a credit to Cash of $20. This company's accounting records are ______.

Business

1 answer:

hjlf · Answer 1 · 2023-05-28T19:24:57+03:00

This company's accounting records are: Incorrect because debits side do no equal credits side.

<h3>Accounting record</h3>

Based on the information given their is an error when recording the journal entry reason been that we are supposed to credit cash with the amount of $200 and not $20.

Due to this error this company's accounting records will be wrong or Incorrect based on the fact that the debits side do no equal credits side.

The principle of accounting entry states that "Every debit entry must have a corresponding credit entry and every credit entry must have a corresponding debit entry"

The correct entry was supposed to be:

Debit Account payable $200

Credit Cash $200

Inconclusion this company's accounting records are: Incorrect because debits side do no equal credits side.

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