Question

Which of the following examples can be classified as an accounts payable?

The Animal Shop paid cash at a home improvement store for wire fencing for the llama run.

The Animal Shop extended credit to a frequent customer and collected the amount owed the next month.

The Animal Shop gave a customer $25 back after she returned a defective dog leash.

The food supplier extended credit to The Animal Shop and collected the amount owed at a future date.

Answer 1

The Answer is

The food supplier extended credit to The Animal Shop and collected the amount owed at a future date.

Explanation:

1) In this question, The Animal Shop is the organization and in order to account for accounts payable to the organization, it has to purchase from outside like supplier or others. Only in the last option Food supplier extended credit to the animal shop. So. It is Account Payable.

2) Option 1 The Animal Shop paid cash at a home improvement store for wire fencing for the llama run is not correct because it is cash transaction.

3) Option 2 The Animal Shop extended credit to a frequent customer and collected the amount owed the next month is not correct because it is accounts receviables transaction.

4) Option 3 The Animal Shop gave a customer $25 back after she returned a defective dog leash is not correct because it is sales return and accounts payable is not involved.