Question

Journal entry for transfer of Purchases is -
Trading A/c Dr.
To Purchases A/c

• A. True
• B. False

Answer 1

The correct option is A True

The given journal entry to transfer purchases is correct because the purcahses account which is to be credited and trading which is to be debited is done right.

Debit an item means reducing the balance whereas credit an item means increasing the balance.

Purchases account is to be credited because at the start of year stock is purchased that means the balance of purchasses account will be raaised since it records the stock bought. Hence, the new stock bought at the start of year has raised the balance of purchases account. The item to be debited now must be any income statement and the best income statement for this purpose is trading account because it records transactions related to purchasse.