grade 11 accounting question..?

1. why is the balance of a supplier's account credit?

2. why is accounts receivable credit when we have a receipt on account?

in class we we're doing questions which account is credit and debit but i didn't get these two even though the teacher explained it..

Update:

for #2, which account is the question referring to?

Update 2:

also, for #1, doesn't 'supplies' go under assets? so isn't it debit?

2 Answers

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  • Sandy
    Lv 7
    1 decade ago
    Favorite Answer

    1. why is the balance of a supplier's account credit?

    A supplier is someone who sells you goods. He is your creditor; you owe him money. As such, he's a liability and all liabilities are credits. Don't confuse this man with supplies, which is an asset.

    2. why is accounts receivable credited when we have a receipt on account?

    This question refers to the accounts receivable account. When you sell goods to him on account, you debit him; he is your debtor, he owes you money. But when he pays you money, you credit his account by the amount he's paid.

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  • Ryan M
    Lv 7
    1 decade ago

    1) It is a liability

    2) a payment on account is a reduction of the asset. Credits decrease assets and debits increase assets.

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