In the transaction where Visa is involved with advertising expense, Visa is what type of account?

In the transaction where Visa is involved with advertising expense, Visa is what type of account?

• A. Asset
• B. Liability
• C. Revenue
• D. Equity

Answer: (B)

Charging advertising expenses to a Visa card creates a debt to the card issuer. That obligation is a liability, so the Visa account on the balance sheet is a liability account. In practice, you would recognize the expense today (debit Advertising Expense) and record the amount owed to Visa (credit Visa or Credit Card Payable). When you later pay the bill, you would reduce that liability (debit Visa Payable) and cash (credit Cash). The other options don’t fit because an asset would be something you own, while revenue increases income, and equity represents the owner's claim—none of which describe the obligation to the card issuer.

Charging advertising expenses to a Visa card creates a debt to the card issuer. That obligation is a liability, so the Visa account on the balance sheet is a liability account. In practice, you would recognize the expense today (debit Advertising Expense) and record the amount owed to Visa (credit Visa or Credit Card Payable). When you later pay the bill, you would reduce that liability (debit Visa Payable) and cash (credit Cash). The other options don’t fit because an asset would be something you own, while revenue increases income, and equity represents the owner's claim—none of which describe the obligation to the card issuer.