A business purchases goods worth Rs. 30,000, paying Rs. 18,000 in cash and owing the remainder to the supplier. Which posting is correct?
Correct answer: A. Debit Purchases Rs. 30,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000
- A. Debit Purchases Rs. 30,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000
- B. Debit Purchases Rs. 18,000; credit Cash Rs. 18,000 and Supplier Rs. 12,000
- C. Debit Cash Rs. 18,000 and Purchases Rs. 12,000; credit Supplier Rs. 30,000
- D. Debit Supplier Rs. 12,000; credit Purchases Rs. 30,000 and Cash Rs. 18,000
Explanation
The full cost of goods purchased is debited to Purchases. Cash is credited for the amount paid immediately, while the supplier is credited for the unpaid balance.
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About Ledger Accounts and the Trial Balance
Ledger accounts collect transactions under individual headings and use debit and credit sides to determine balances. The trial balance lists those balances to check arithmetical agreement before financial statements are prepared, but it does not reveal every error, such as complete omission, compensating errors or entries made in the wrong account.
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