A credit purchase of goods from Hamid is recorded in the purchases day book. Which account is credited when it is posted?
Correct answer: B. Hamid's account
- A. Purchases account
- B. Hamid's account
- C. Cash account
- D. Sales account
Explanation
Hamid is the supplier and becomes a creditor, so his personal account is credited. The purchases account is debited for the goods acquired on credit.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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