Purchases in trading A/c includes _______.

only cash purchases

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only credit purchases

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both cash and credit purchases

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purchase of fixed assets

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Solution

The correct option is B both cash and credit purchases
Cash purchases are recorded in cash book and credit purchases are recorded in purchase day book. Both i.e. cash and credit purchases are posted in purchase a/c in ledger. All purchases i.e. cash purchases and credit purchases are shown in trading account as purchases.

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Similar questions

State which fo the following would result in inflow/outflow of Cash or Cash Equivalents:
(i) Purchase of Inventory for cash.
(ii) Purchase of goods on credit.
(iii) Sale of Goods costing Rs. 10,000 for Rs. 12,000 for cash.
(iv) Sale fo Goods on Credit.
(v) Purchase of a fixed asset by issue of shares.

Q. Cash credit is normally given on security of stock, debtors etc. whereas bank credit is normally given on security of a fixed asset.

Q. From the following details calculate net profit on accrual basis.

Particulars	Rs.
Goods sold for cash	$5, 00, 000$
Credit sales	$25, 000$
Cash purchases	$4, 00, 000$
Credit purchases	$50, 000$
Wages paid	$20, 000$
Outstanding expenses	$10, 000$
Rent paid	$5, 000$
Rent outstanding	$2, 000$
Depreciation on building	$10, 000$
Loss on sales of fixed assets	$1, 000$

Q. State giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2:1:
(a) Cash paid to Trade Payables.
(b) Bills Payable discharged.
(c) Bills Receivable endorsed to a creditor.
(d) Payment of final Dividend already declared.
(e) Purchase of Stock-in-Trade on credit.
(f) Bills Receivable endorsed to a Creditor dishonoured.
(g) Purchases of Stock-in-Trade for cash.
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Q. A cash purchase of goods for proprietor's personal use should be credited to __________________.

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