Accounts Payable is classified as which type of account, and what is its normal increase side?

• A. Asset, Dr.
• B. Expense, Dr
• C. Revenue, Cr
• D. Liability, Cr.

Answer: (D)

Accounts Payable is a liability account. In double-entry accounting, liabilities increase on the credit side and decrease on the debit side. Because AP represents amounts you owe to suppliers, it normally has a credit balance, with increases recorded by crediting it (for example, when you purchase on credit). When you pay the liability, you debit Accounts Payable to reduce it and credit Cash. So the correct idea is that it is a liability and its normal increase side is the credit.