Question

Purchases journal (also called Purchase book or Invoice book or Invoice journal) is used for recording ________________.

• A. Cash purchases
• B. Credit purchases
• C. Total purchases
• D. None of these

Answer 1

Answer: (B)

Credit purchases

All goods purchased on credit is are recorded in the Purchase book. Whenever goods are purchased on credit, purchase account is debited (as per the rule, "Debit what comes in") i.e. goods comes in, hence purchase account is debited. The document on the basis of which purchase book is prepared is known as "Credit memo".