A $375 Purchase of Supplies on Account Was Recorded by Debiting

question 60

Multiple Choice

A $375 purchase of supplies on account was recorded by debiting Supplies for $375 and crediting Cash for $375. The entry needed to correct this error is:

• A)Debit Accounts Payable for $375 and credit Cash for $375.
• B)Debit Accounts Receivable for $375 and credit Cash for $375.
• C)Debit Cash for $375 and credit Accounts Payable for $375.
• D)Debit Cash for $375 and credit Accounts Receivable for $375.

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Definitions:

Proprietorship

A business owned and operated by a single person, making it the simplest form of business ownership.

Business Owned

Refers to entities such as companies or enterprises that are possessed and controlled by one or more persons or other businesses.

Economic Entity Assumption

An accounting principle that treats a business as separate from its owners, allowing for independent financial statements.

Personal Living Expenses

Costs associated with daily living, including food, housing, transportation, and entertainment.