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Which of the following journal entries represents an increase in accounts payable correctly
A) Accounts Payable xxx Cash xxx
B) Accounts Payable xxx Revenue xxx
C) Inventory xxx Accounts Payable xxx
D) Revenue xxx Accounts Receivable xxx
E) More than one of the above
F) None of the above

Respuesta :

Answer:

C) Inventory xxx Accounts Payable xxx

Explanation:

Accounts payable is a liability, and a liability always has a credit balance, as the amount is due to them. The company needs to pay them back.

Accordingly the company buys inventory and the inventory is an asset and thus, the company will debit the inventory account.

Whenever any purchases are made, or any service is utilized on credit then the company creates an accounts payable as a liability as against it.