A sales manager purchases office supplies with the company credit card. This transaction impacts the accounts payable and the office supplies accounts. In your journal entry, which account do you credit?

A sales manager purchases office supplies with the company credit card. This transaction impacts the accounts payable and the office supplies accounts. In your journal entry, which account do you credit?

• A. Office supplies account
• B. Accounts payable
• C. Cash account
• D. Credit card expense

Answer: (B)

Using a company credit card to buy office supplies creates a liability to pay the card issuer. In the journal entry you would increase Office Supplies (debit) to reflect what you acquired, and you would credit Accounts Payable to record the obligation to the card company. This keeps the liability side growing because you owe that amount. When you later pay the card, you would debit Accounts Payable and credit Cash. Credit card expense isn’t the right credit here, because the initial action is to recognize the asset or expense of the supplies and the corresponding liability to the card issuer; the payment itself would affect Cash and Accounts Payable.

Using a company credit card to buy office supplies creates a liability to pay the card issuer. In the journal entry you would increase Office Supplies (debit) to reflect what you acquired, and you would credit Accounts Payable to record the obligation to the card company. This keeps the liability side growing because you owe that amount. When you later pay the card, you would debit Accounts Payable and credit Cash. Credit card expense isn’t the right credit here, because the initial action is to recognize the asset or expense of the supplies and the corresponding liability to the card issuer; the payment itself would affect Cash and Accounts Payable.