Which of the following is the correct journal entry to record the payment of a liability in cash?

• A. Debit Cash; Credit Liability
• B. Debit Revenue; Credit Cash
• C. Debit Expense; Credit Revenue
• D. Debit Liability; Credit Cash

Answer: (D)

Verified step by step guidance

1. Understand the concept of a liability: A liability represents an obligation or debt owed by a company to another party, typically recorded on the balance sheet.
2. Recognize the impact of payment: When a liability is paid off, the liability account decreases (debit) because the obligation is being settled, and cash decreases (credit) because cash is being used to make the payment.
3. Recall the rules of debits and credits: Debits increase asset accounts and decrease liability accounts, while credits decrease asset accounts and increase liability accounts.
4. Apply the journal entry format: To record the payment of a liability, you would debit the liability account to reduce it and credit the cash account to reflect the decrease in cash.
5. Verify the correct journal entry: Based on the explanation, the correct journal entry is 'Debit Liability; Credit Cash,' as this reflects the reduction of the liability and the use of cash for payment.