In the traditional rules of debit and credit, which entry is normally made for an expense incurred on credit?
Correct answer: A. Debit the expense account and credit a payable account
- A. Debit the expense account and credit a payable account
- B. Credit the expense account and debit a payable account
- C. Debit the payable account and credit the expense account
- D. Credit both the expense and payable accounts
Explanation
An expense increases on the debit side, while the unpaid obligation increases the payable liability on the credit side. The entry recognises both the cost and the amount owed.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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