ACCA FA · Chapter 3 · Question 4 of 10
The owner of a shop takes goods costing $350 from inventory for personal use. What is the double entry to record this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Drawings $350, Credit Purchases $350
Explanation
Goods taken by the owner are drawings, which reduce capital and are debited to the drawings account. The goods were not sold, so revenue is not credited; instead purchases are credited at cost so that cost of sales only includes goods used in the business. No cash is involved.
More Double entry bookkeeping and the accounting equation MCQs
- Q6A business operates a petty cash imprest system with a float of $350. During the month, petty cash vouchers totalling $212 were paid out…
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- 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?
- Q10A business buys a delivery van on credit. What is the effect on the accounting equation?