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When a company purchases inventory (merchandise purchased in order to be resold) what will happen to its Cash account?

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Question ajoutée par Michael Lagunday , Accounts Assistant , Invest Group Overseas LLC
Date de publication: 2015/08/17
Utilisateur supprimé
par Utilisateur supprimé

Purchases of inventory can be done by cash payment or on credit basis, if the purchase is done with the intention of enjoying credit terms then cash will not be affected as the cost of the inventory will be treated as liability (payable).

On the other hand if payment was made for the purchase of the inventory then cash will reduce with the cost of the inventory whereas inventory will increase.

Hossam Mohamed
par Hossam Mohamed , Senior Accountant , Allied Arab Assurance Brokerage

The cash account decreases... 

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