A Firm Paid Cash to Apply Against a Debt

question 100

Multiple Choice

A firm paid cash to apply against a debt. To record this transaction, the accountant would:

• A)credit Cash and credit Accounts Payable.
• B)debit Accounts Payable and credit Cash.
• C)debit Accounts Receivable and credit Cash.
• D)debit Cash and credit Accounts Payable.

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Definitions:

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations and external investment sources.

Investing Activities

Transactions related to the acquisition or disposal of long-term assets and other investments not included in cash equivalents.

Bonds Payable

Long-term liabilities representing amounts owed by a corporation or government to bondholders, to be repaid at a specified future date.

Receipts

Records of transactions indicating payment made or received.