PRC-1 · Chapter 1 · Question 46 of 100
'Urban Architects' purchases new drafting computers for their office on credit from 'Tech Source'. What is the correct double-entry to record this specific transaction?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Office Equipment Account, Credit Tech Source Account
Explanation
Purchasing an asset on credit increases the non-current asset (Debit Office Equipment) and increases the liability owed to the supplier (Credit Tech Source). The Purchases account is only used for trading inventory.
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