The entry to record a purchase of merchandise on credit includes:
A)a debit to Purchases and a credit to Accounts Payable.
B)a debit to Purchases and a credit to Accounts Receivable.
C)a debit to Accounts Payable and a credit to Purchases.
D)a credit to Purchases and a credit to Accounts Payable.

Question

Quizplus · Accepted Answer

When a business purchases merchandise on credit, there is an increase in both the inventory account (Purchases) and the liability account (Accounts Payable). Therefore, the correct entry is to debit Purchases (increasing it) and credit Accounts Payable (increasing the liability).

The Entry to Record a Purchase of Merchandise on Credit