Which of the following will be debited if a business purchases goods on credit?
Correct answer: D. Purchases
- A. Cash
- B. Debtor
- C. Creditor
- D. Purchases
Explanation
A credit purchase increases purchases, so Purchases is debited, while the supplier or creditor is credited. Cash is not involved because payment has not yet been made.
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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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