When recording a bill received from a supplier, which account is typically credited in the journal entry?

• A. Sales Revenue
• B. Cash
• C. Inventory
• D. Accounts Payable

Answer: (D)

Verified step by step guidance

1. Understand the nature of the transaction: A bill received from a supplier indicates that the company has incurred an obligation to pay for goods or services received. This creates a liability.
2. Identify the accounts involved: The accounts typically involved in this transaction are the expense or asset account (depending on what the bill is for) and the liability account, Accounts Payable.
3. Determine the journal entry structure: In double-entry accounting, every transaction affects at least two accounts. One account is debited, and the other is credited.
4. Decide which account is debited: The account that represents the expense or asset (e.g., Inventory, if the bill is for purchased goods) is debited to reflect the increase in expenses or assets.
5. Decide which account is credited: Accounts Payable is credited to record the liability, as the company now owes money to the supplier for the goods or services received.