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Purchase of goods for cash from Mr. XYZ is to be recorded by:
(a) Debiting Purchases Account and Crediting Mr. XYZ Account
(b) Debiting Purchases Account and Crediting Cash Account
(c) Debiting Mr. XYZ Account and Crediting Cash Account
(d) Debiting Cash Account and Crediting Purchases Account
The answer is (b)- Debiting Purchases A/c and Crediting Cash A/c.
debiting purchases and crediting cash account because its cash purchase not a credit so Mr. XYZ is irrelevant.
100% option b is correct.
Purchases Account
to Cash account
Option B is the right answer:
DR Purchases
CR Cash
This entry used the Periodic Inventory System but if Perpetual Inventory System has been used, the entry would be:
DR Inventory or Merchandise Inventory
CR Cash
(b) Debiting Purchases Account and Crediting Cash Account
DR Purchase A/C
CR Cash A/c
Option (B)
Dr. Purchases
Cr. Cash
Inventory Account or Consumable Account Dr
To Cash