Which book of prime entry records credit purchases of assets such as furniture?
Correct answer: C. Journal proper
- A. Purchases day book
- B. Sales day book
- C. Journal proper
- D. Cash book
Explanation
The purchases day book is restricted to credit purchases of goods for resale. Credit purchases of fixed assets are recorded in the journal proper.
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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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