Question

cincinnati supply, co. is a local supplier to the kraft heinz company, which is the third - largest food and beverage company in north america and the fifth - largest food and beverage company in the world. cincinnati supply, co. purchased office supplies on credit. the general journal entry made by cincinnati supply, co. will include a:

credit to common stock.

credit to accounts payable.

credit to cash.

debit to accounts receivable.

debit to accounts payable.

Explanation:

When a company purchases on credit, it creates a liability. Accounts Payable is used to record amounts owed to suppliers for goods or services purchased on credit. Common Stock is related to equity, not credit - purchases. Cash is not involved in a credit - purchase transaction at the time of purchase. Accounts Receivable is for amounts owed to the company, not amounts the company owes. Debiting Accounts Payable would reduce the liability, which is incorrect in this case of incurring a new liability.

Answer:

B. Credit to Accounts Payable.