ACCA FA · Chapter 3 · Question 3 of 10
What is the double entry to record the purchase of goods for resale on credit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Purchases, Credit Payables
Explanation
Buying goods for resale increases the purchases expense, which is a debit. Because the goods are bought on credit, the business now owes the supplier, so trade payables are credited. Inventory is only adjusted at the period end for closing inventory, and cash is not affected until the supplier is paid.
More Double entry bookkeeping and the accounting equation MCQs
- Q5In which book of prime entry would a credit note issued to a credit customer for goods returned first be recorded?
- Q6A business operates a petty cash imprest system with a float of $350. During the month, petty cash vouchers totalling $212 were paid out…
- Q7A customer's account in the receivables ledger had an opening debit balance of $1,200. During the month, credit sales of $4,500 were made…
- Q8Which type of transaction would normally be recorded in the journal?
- Q9Which of the following accounts would normally have a CREDIT balance in a trial balance?