Credit purchase of plant and machinery is recorded in which of the following journals?
Correct answer: A. General journal
- A. General journal
- B. Cash journal
- C. Purchase journal
- D. Purchase return journal
Explanation
The purchase journal is reserved for credit purchases of goods held for resale, not long-term assets. Plant and machinery is therefore recorded in the general journal, usually by debiting the asset account and crediting the supplier.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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