Advertising expense payment method?

Advertising expense payment method?

• A. Cash
• B. Check #0002
• C. Check #0001
• D. Credit Card

Answer: (C)

When you pay an expense, you need to record not only the expense itself but also how the payment left the business. If the advertising expense was settled by issuing a check, the entry reflects a cash outflow from the bank and the expense is increased. The check number is recorded so you can trace the payment to the exact bank transaction. In this case, the payment being made by check and specifically the check numbered 0001 is the correct method to note, because it provides a precise reference for reconciliation with the bank statement. Using a cash payment would imply cash on hand was used, and a credit card payment would create a credit card liability and a different set of records; using a different check number would misalign the bank record and the disbursement, breaking the audit trail.

When you pay an expense, you need to record not only the expense itself but also how the payment left the business. If the advertising expense was settled by issuing a check, the entry reflects a cash outflow from the bank and the expense is increased. The check number is recorded so you can trace the payment to the exact bank transaction. In this case, the payment being made by check and specifically the check numbered 0001 is the correct method to note, because it provides a precise reference for reconciliation with the bank statement. Using a cash payment would imply cash on hand was used, and a credit card payment would create a credit card liability and a different set of records; using a different check number would misalign the bank record and the disbursement, breaking the audit trail.