Question

A credit is used to record an increase in which of the following accounts?

A. Supplies
B. Cash
C. Accounts Payable
D. Wages Expense
E. Prepaid Insurance

Answer 1

A credit is used to record an increase in the Accounts Payable account, as credits increase liability, revenue, and equity accounts in double-entry bookkeeping.

Step-by-step explanation:

A credit is used to record an increase in Accounts Payable. In the double-entry bookkeeping system, credits and debits are used to record every transaction. Increases in liability, revenue, and equity accounts are recorded as credits, while increases in asset and expense accounts are recorded as debits.

So, when looking at the options given:

• Supplies (Asset) - Decreases with credits
• Cash (Asset) - Decreases with credits
• Accounts Payable (Liability) - Increases with credits
• Wages Expense (Expense) - Decreases with credits
• Prepaid Insurance (Asset) - Decreases with credits

Therefore, the correct answer is C. Accounts Payable.