Question

Which of the following accounts will invariably have a credit balance?

• A. Accounts receivable
• B. Accounts payable
• C. Purchases account
• D. Bank account

Answer 1

The correct option is B Accounts payable

When goods are purchased on credit against which payments to be received by the company in near future create accounts payable in the books of the concern. A group of people who are giving goods on credit are commonly known as Accounts Payable.

Accounting entry will be as under:

Purchases A/c Dr.

To Accounts Payable

Accounts Payable will always have a credit balance.