Where does a photocopier purchased on credit get recorded, and which accounts are affected when it is paid off?
submitted by El

Kolar

Because you bought it on credit, you'd record it as a debit to the equipment account (or some similar fixed asset account) and a credit to accounts payable.

Doing it this way will show that you gained an asset, but also gained a liability (the credit.) When the company makes the payment to settle the debt, the accounts payable will go down (debit it), and the cash or bank account is credited (reduced). That will clear the debt liability and decreases the company's cash balance until you're all settled up.

Frimbiquious

The copier gets recorded as an increase in equipment because it's an asset. The liability, which is your debt, goes in accounts payable because you owe money.

When you pay off the invoice, you decrease accounts payable and also decrease cash since you're paying with money.