Question

Purchase account comprises of transactions of ___________.

• A. Purchase of furniture
• B. Cash and credit purchase
• C. Purchase return
• D. Purchase or stationery

Answer 1

Answer: (B)

Cash and credit purchase

When goods are purchased either for cash or on credit, purchase account is debited. Purchase account belongs to nominal account and according to the rule of nominal account, expenses of the business is debited. All credit purchase of goods are recorded in the purchase journal while cash purchase are recorded in cash book. Other purchases such as purchases of office equipment, furniture, building etc. are recorded in the journal proper if purchased on credit or in the cash book if purchased for cash.