What is the entry to record paying off accounts payable of $700?

What is the entry to record paying off accounts payable of $700?

• A. Debit Accounts Payable $700, Credit Cash $700.
• B. Debit Cash $700, Credit Accounts Payable $700.
• C. Debit Utilities Expense $700, Credit Cash $700.
• D. Debit Accounts Receivable $700, Credit Cash $700.

Answer: (A)

When you pay off an accounts payable, you’re decreasing a liability and decreasing cash. The correct journal entry is to debit Accounts Payable for 700 to reduce the liability, and credit Cash for 700 to reflect the cash outflow. This mirrors settling what you owe to suppliers. Why the other options don’t fit: debiting Cash would increase cash, which isn’t what happens when you pay a bill; debiting Utilities Expense would record an expense rather than the payment of a liability; debiting Accounts Receivable would reflect money received from customers, not money paid to suppliers.

When you pay off an accounts payable, you’re decreasing a liability and decreasing cash. The correct journal entry is to debit Accounts Payable for 700 to reduce the liability, and credit Cash for 700 to reflect the cash outflow. This mirrors settling what you owe to suppliers.

Why the other options don’t fit: debiting Cash would increase cash, which isn’t what happens when you pay a bill; debiting Utilities Expense would record an expense rather than the payment of a liability; debiting Accounts Receivable would reflect money received from customers, not money paid to suppliers.