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A company paid $200 cash for supplies that were purchased last month. However, the company recorded a debit to Accounts Payable of $200 and a credit to Cash of $20. This company's accounting records are ______.

Sagot :

This company's accounting records are: Incorrect because debits side  do no equal credits side.

Accounting record

Based on the information given their is an error when recording the journal entry reason  been that we are supposed to credit cash with the amount of $200 and not $20.

Due to this error this company's accounting records will be wrong or  Incorrect based on the fact that the  debits side  do no equal credits side.

The principle of accounting entry states that "Every debit entry must have a corresponding credit entry and every credit entry must have a corresponding debit entry"

The correct entry was supposed to be:

Debit Account payable $200

Credit Cash $200

Inconclusion  this company's accounting records are: Incorrect because debits side  do no equal credits side.

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