On May 17, Burchel Industries Purchased Equipment with a Cost

question 159

Multiple Choice

On May 17, Burchel Industries purchased equipment with a cost of $2,000 on account. The entry to record the purchase will include

• A) a debit to Equipment and a credit to Accounts Payable.
• B) a debit to Equipment Expense and a credit to Accounts Receivable.
• C) a debit to Equipment and a credit to Cash.
• D) a debit to Accounts Receivable and a credit to Equipment.

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Definitions:

Expenses

Outflows or other uses of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Assets

Resources owned or controlled by a business, considered to have economic value and expected to benefit future operations.

Prepaid Rent Expense

Prepaid rent expense is an advance payment for rent that is recorded as an asset on the balance sheet until it is used or consumed in future periods.

Liability

An obligation that a corporation or individual has to another entity, typically financial in nature, such as loans or accounts payable.