PRC-1 · Chapter 1 · Question 5 of 100
'Silverline Electronics' purchased a new central air conditioning unit for its office on credit from 'CoolBreeze Ltd'. What is the correct double-entry for this transaction?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Office Equipment, Credit CoolBreeze Ltd
Explanation
Purchasing an asset on credit increases the asset (Debit Office Equipment) and increases the liability owed to the supplier (Credit CoolBreeze Ltd). It is not recorded in purchases, which is reserved for trading goods.
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