The ABC Company Paid Cash on Account for Supplies Purchased

question 11

Multiple Choice

The ABC Company paid cash on account for supplies purchased last month. This would be recorded in the T-accounts as a:

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

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and then subtracting the cost of goods sold.

Gross Profit

The difference between sales and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

FIFO Inventory

Stands for "First-In, First-Out", an inventory valuation method where the oldest inventory items are recorded as sold first.

Perpetual Inventory System

This inventory accounting technique instantly logs the acquisition or sale of inventory by utilizing computerized point-of-sale systems along with enterprise asset management software.