Questions: A company purchases inventory or supplies and promises to pay within 30 to 45 days. No formal agreement is signed. The company records this transaction as accounts payable. notes receivable. notes payable. accounts receivable.

A company purchases inventory or supplies and promises to pay within 30 to 45 days. No formal agreement is signed. The company records this transaction as
accounts payable.
notes receivable.
notes payable.
accounts receivable.

Transcript text: A company purchases inventory or supplies and promises to pay within 30 to 45 days. No formal agreement is signed. The company records this transaction as accounts payable. notes receivable. notes payable. accounts receivable.

Solution

Answer

The answer is accounts payable.

Explanation

Option 1: Accounts payable

Accounts payable represent the amount a company owes to its suppliers for purchases made on credit. This is typically recorded when a company buys inventory or supplies and promises to pay within a specified period, such as 30 to 45 days, without signing a formal agreement.

Option 2: Notes receivable

Notes receivable are amounts owed to the company by others, typically documented by a formal promissory note. This is not applicable in this scenario as the company is the one owing money, not receiving it.

Option 3: Notes payable

Notes payable are formal written agreements where the company promises to pay a certain amount of money at a future date. This involves a formal agreement, which is not the case in the given scenario.

Option 4: Accounts receivable

Accounts receivable represent amounts owed to the company by its customers for goods or services provided on credit. This is not applicable here as the company is the one making the purchase and owing money.

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