The Account Distribution for Purchases of Inventory on Account Is

question 20

Multiple Choice

The account distribution for purchases of inventory on account is:

• A)Debit Checking and Merchandise Inventory; credit Accounts Receivable/customer.
• B)Debit Merchandise Inventory and Accounts Receivable; credit Sales.
• C)Debit Accounts Receivable/Customer; credit Accounts Payable/vendor.
• D)Debit Merchandise Inventory; credit Accounts Payable/vendor.
• E)None.

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Definitions:

Owner's Equity

The residual interest in the assets of a business after deducting liabilities, representing the ownership interest of shareholders or partners.

Liabilities

Financial obligations or debts owed by a business to outsiders, such as loans, accounts payable, or mortgages.

Owner's Equity

The total assets minus total liabilities of an individual owner in a business, representing the owner's residual interest in the company.