What is the journal entry when paying a supplier for a prior credit purchase?

• A. Debit Cash; Credit Accounts Payable.
• B. Debit Inventory; Credit Cash.
• C. Debit Accounts Receivable; Credit Revenue.
• D. Debit Accounts Payable; Credit Cash.

Answer: (D)

Paying a supplier for a prior credit purchase settles what you owe. Accounts Payable is a liability, representing money you must pay to suppliers. When you make the payment, you decrease that liability and also decrease your cash asset. The correct entry is to debit Accounts Payable for the amount owed and credit Cash for the cash paid. This keeps the accounting equation balanced and shows that the obligation has been fulfilled without affecting revenue or other asset accounts beyond cash.

The other options don’t fit because they would either increase cash, imply a new purchase or revenue event, or affect receivables instead of the liability you’re paying.