Tim Smith purchases a truck for $38,000. Tim debits an account, truck, and credits ... Select...

Tim Smith purchases a truck for $38,000. Tim debits an account, truck, and credits ...

Select one:

a) An asset account

b) A liability account

c) An owner's equity account

d) None of the above

Solutions

Expert Solution

Answer is option b) A liability account

Explanation :

Tim has purchased the truck for $38,000. Since, it is not mentioned that he has made the payment, he will credit a liability account (Notes Payable).

Note : In case, if it was mentioned that Tim has purchased the truck for cash, then he would credit an asset account (Cash).

ekkarill92 answered 2 years ago

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