Lou pays $100 to advertise in his local mailer and puts the charge on his Visa credit card. Which two accounts are involved in this transaction?

Lou pays $100 to advertise in his local mailer and puts the charge on his Visa credit card. Which two accounts are involved in this transaction?

• A. Visa, Advertising expense
• B. Visa, Advertising revenue
• C. Visa, cash
• D. Visa, Equipment

Answer: (A)

When you charge advertising on a Visa card, you’ve incurred an expense and created a payable to the card issuer. In double-entry terms, you debit Advertising expense to record the cost of the ad, and you credit Visa to show the liability to the credit card company. Cash isn’t affected yet because you haven’t paid cash at the moment of the charge, and the other options don’t fit because this is an expense, not revenue, and it doesn’t involve a cash outlay or a fixed asset.

When you charge advertising on a Visa card, you’ve incurred an expense and created a payable to the card issuer. In double-entry terms, you debit Advertising expense to record the cost of the ad, and you credit Visa to show the liability to the credit card company. Cash isn’t affected yet because you haven’t paid cash at the moment of the charge, and the other options don’t fit because this is an expense, not revenue, and it doesn’t involve a cash outlay or a fixed asset.