Final answer:
When a bill is issued for an inventory item, the inventory account is debited, and the accounts payable or cash account is credited in the Chart of Accounts.
Step-by-step explanation:
When a bill is created for an inventory item, the accounts affected on the Chart of Accounts typically include inventory and accounts payable or cash. When goods are purchased, the inventory account is debited, reflecting an increase in assets. Simultaneously, an equal credit to the accounts payable account (if the purchase is on credit) or the cash account (if it's a cash purchase) is recorded, representing an increased liability or a decrease in the cash asset.
In accounting, this transaction is guided by the fundamental principle of double-entry bookkeeping, where every debit entry must have a corresponding credit entry. This ensures that the accounting equation remains balanced. The formula for the accounting equation is Assets = Liabilities + Equity.