20.03.2023 - 03:48

When delivery equipment is purchased on account, the transaction to be recorded by the purchaser includes debiting: o A: Delivery Equip & crediting AP o B: Delivery Equip & crediting Cash

Question:

When delivery equipment is purchased on account, the transaction to be recorded by the purchaser includes debiting:

  1. o A: Delivery Equip & crediting AP
  2. o B: Delivery Equip & crediting Cash
  3. o C: Delivery Expense & crediting AP
  4. o D: Delivery Expense & crediting Cash
Answers (1)
  • italianochka
    April 1, 2023 в 18:17

    The correct answer is option A: Delivery Equip & crediting AP.

    When delivery equipment is purchased on account, it means that the purchaser has received the equipment but has not yet paid for it. In this case, the purchaser owes money to the supplier and has an accounts payable (AP) liability.

    To record this transaction, the purchaser needs to debit the Delivery Equipment account to increase the asset and credit the AP account to increase the liability. Option A correctly identifies these accounts to be debited and credited.

    Option B (Delivery Equip & crediting Cash) is incorrect because cash is not involved in this transaction. The purchaser has not yet paid for the equipment.

    Option C (Delivery Expense & crediting AP) is incorrect because delivery expense is not relevant to this transaction. The question specifically mentions that delivery equipment was purchased, not just delivered.

    Option D (Delivery Expense & crediting Cash) is also incorrect because delivery expense is not relevant to this transaction, and cash is not involved.

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