The Purchase of Supplies on Account Was Recorded and Posted

question 73

Multiple Choice

The purchase of supplies on account was recorded and posted as a debit to Supplies for $500 and a credit to Accounts Receivable for $500. The correcting entry would include a

• A) credit to Accounts Receivable for $500
• B) credit to Accounts Receivable for $1,000
• C) credit to Accounts Payable for $500
• D) credit to Accounts Payable for $1,000

---

Definitions:

Operating Segments

Components of an enterprise that engage in business activities earning revenues and incurring expenses, whose operational results are regularly reviewed by the entity's chief operating decision maker.

External Customers

Individuals or entities that purchase goods or services from a business but are not part of the organization itself.

Revenue Test

A criterion used to determine the recognition of revenue in accounting, which stipulates that revenue can be recognized when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

Profit or Loss Test

A method used to determine the effectiveness and efficiency of a business by comparing its profits or losses over a specific period.