The Rebecca Company acquired merchandise inventory costing $10,000 on September 1. The company will not pay for the inventory until October 1. This transaction will affect the Rebecca Company by increasing the Merchandise Inventory account by $10,000 and _____.
A. increasing the Capital account by $10,000
B. decreasing the Capital account by $10,000
C. increasing the Accounts Payable account by $10,000
D. decreasing the Accounts Payable account by $10,000
The correct answer is D. decreasing the Accounts Payable account by $10,000.
When the Rebecca Company acquires merchandise inventory costing $10,000 on September 1, it means they have purchased inventory but have not yet paid for it. In accounting, this is recorded as an increase in the Merchandise Inventory account because the company now has more inventory on hand.
However, since the company has not paid for the inventory yet, it means they owe the money to their suppliers. This is recorded as an increase in the Accounts Payable account because the company now has an outstanding liability to pay for the inventory.
Therefore, the transaction will increase the Merchandise Inventory account by $10,000 and decrease the Accounts Payable account by $10,000. This is reflected in answer choice D.