Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 21 - No. 16)

If a company purchases inventory on credit, which of the following will be correct?

Debit Inventory, Credit Cash

Debit Inventory, Credit Accounts Payable

Debit Cash, Credit Inventory

Debit Accounts Payable, Credit Inventory

The inventory asset increases and there is an increased accounts payable liability.