Which statement is true about the truck purchase scenario?

Which statement is true about the truck purchase scenario?

• A. Total debited to Truck is $50,000
• B. Cash will be debited $7,000
• C. Accounts Payable is debited $43,000
• D. Total credits exceed $50,000

Answer: (A)

Double-entry accounting requires that every transaction has equal debits and credits. For a truck purchased at 50,000 with 7,000 paid in cash and the remaining 43,000 financed, the Truck asset is increased by debiting 50,000. Cash is decreased by 7,000, so Cash is credited for 7,000. The obligation to pay 43,000 increases the Accounts Payable, so Accounts Payable is credited for 43,000. The total debits and total credits both equal 50,000, so the entry balances. The other statements misstate the effects: cash is not debited when paying cash, accounts payable is not debited when increasing liability, and credits do not exceed 50,000 (they total 50,000).

Double-entry accounting requires that every transaction has equal debits and credits. For a truck purchased at 50,000 with 7,000 paid in cash and the remaining 43,000 financed, the Truck asset is increased by debiting 50,000. Cash is decreased by 7,000, so Cash is credited for 7,000. The obligation to pay 43,000 increases the Accounts Payable, so Accounts Payable is credited for 43,000. The total debits and total credits both equal 50,000, so the entry balances. The other statements misstate the effects: cash is not debited when paying cash, accounts payable is not debited when increasing liability, and credits do not exceed 50,000 (they total 50,000).