How is Accounts Payable defined in relation to purchased materials?

Accounts Payable is defined as the amount a company owes to its suppliers for materials or services purchased on credit. This implies a liability represents the obligation to pay in the future for purchases made today. When materials are purchased "on account," this transaction increases the company's inventory or assets while simultaneously increasing liabilities since the business now has a debt to the supplier.

In this scenario, when materials are received but not yet paid for, the business records an increase in both the inventory (an asset) and accounts payable (a liability). This dual increase is characteristic of accounting for purchases made on credit. Therefore, recognizing that Accounts Payable represents materials purchased on account, which indeed leads to an increase in both assets (due to the materials received) and liabilities (the amount owed to suppliers), solidifies option C as the correct explanation of Accounts Payable in this context.