Question
Prana has just ordered a large variety of colors of yarn for her sweater business, and the bill should come in 30 days or so, when she'll have to pay it. Which is an element of how she should enter the transaction in her journal?
Question 8 options:
She should credit Accounts Payable.
She should debit Short-term Debt
She shouldn't enter anything yet because she hasn't received the product yet.
She should debit Accounts Payable
Question 8 options:
She should credit Accounts Payable.
She should debit Short-term Debt
She shouldn't enter anything yet because she hasn't received the product yet.
She should debit Accounts Payable
Answers
GPT-4o mini
In accounting, when a company orders goods on credit, it creates a liability to pay for those goods in the future. In this scenario, Prana has ordered yarn and will receive a bill for it, which creates an accounts payable obligation even though she hasn't received the product yet.
Therefore, the correct entry for this transaction would be to credit Accounts Payable, as it reflects the incurrence of a liability when the order is placed.
So, the correct answer is:
**She should credit Accounts Payable.**
Therefore, the correct entry for this transaction would be to credit Accounts Payable, as it reflects the incurrence of a liability when the order is placed.
So, the correct answer is:
**She should credit Accounts Payable.**