When recording the receipt of a mortgage, which account is credited?

When recording the receipt of a mortgage, the account that is credited is Mortgage Payable. This is because receiving a mortgage indicates that a liability has been incurred.

The journal entry for this transaction typically involves debiting the Cash account (reflecting the inflow of cash received from the mortgage) and crediting the Mortgage Payable account, which signifies that the business now has an obligation to pay back the mortgage in the future. By crediting the Mortgage Payable account, you are increasing the liability on the balance sheet, indicating that the company owes this amount to the lender.

In the context of your other options, Buildings would be debited if the mortgage was used to purchase a building, but it is not credited. Cash would be debited to show an increase in cash from the mortgage proceeds, again not credited. Notes Payable could also be relevant, but typically specific mortgage transactions are recorded under Mortgage Payable to more accurately represent the terms and nature of the debt. Therefore, the accurate account to credit in this scenario is Mortgage Payable, reflecting the new liability created by taking on the mortgage.