A business purchases office furniture for cash. Which ledger posting is correct?
Correct answer: B. Debit Furniture Account and credit Cash Account
- A. Debit Cash Account and credit Furniture Account
- B. Debit Furniture Account and credit Cash Account
- C. Debit Purchases Account and credit Cash Account
- D. Debit Expense Account and credit Furniture Account
Explanation
Furniture is an asset that increases, so the Furniture Account is debited. Cash decreases as payment is made, so the Cash Account is credited. The item is a fixed asset, not ordinary purchases for resale.
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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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