State BPA Fundamental Accounting Practice Exam

Writing a check to a vendor for a prior purchase results in a credit to which account?

1. Accounts payable

2. Cash

3. Supplies

4. Equipment

The correct answer is: Accounts payable

When writing a check to a vendor for a prior purchase, the transaction involves reducing the amount the business owes to that vendor. This reduction is reflected in the accounts payable account, which represents the company's obligations to pay suppliers for goods or services received. By making a payment to the vendor, the accounts payable account is credited, thereby decreasing the liability. This entry signifies that the business has satisfied part of its outstanding debts. In contrast, the cash account is debited to show the outflow of cash as the business pays off the liability. Understanding this relationship between the liability and the cash accounts is crucial for proper accounting practices, as it reflects the company's commitment to settling its obligations.