Question

Purchases that are recorded in purchases (Journal) book ?

• A. Credit purchases of goods.
• B. Purchases of office equipment.
• C. Purchases of office furniture.
• D. Cash purchases of goods.

Answer 1

Answer: (A)

Credit purchases of goods.

Purchase books are the subsidiary books prepared for recording the accounting information.

In the purchase books all the credit purchases of goods are recorded that are meant for resale and the cash transactions are avoided since cash transactions are recorded in the cash book. Purchase books do not involve the purchase of assets on credit and these assets purchase is recorded in the Journal proper.

For example : Gupta electronics made the following purchases on credit during the year 2017 :

Jan 4 Bought Rs.10000 goods from RAM.

Jan 11 Bought Rs.20000 goods from modern dealers.

Jan 14 Bought Rs.35000 goods from Jana electric store.

Jan 25 Bought Rs.150000 Furniture from Navindra furniture's.

Now while preparing the purchase book we will record the entries of goods purchased on credit of amounts 10000 , 20000 , and 35000 and the purchase of asset (furniture) will be transferred to the journal proper since purchase books record credit transactions of goods related to resale of day to day business of the firms.

DATE	PARTICULARS	I.N	L.F	AMOUNT
JAN 4 JAN 11 JAN 14	RAM MODERN DEALERS JANA ELECTRIC STORE			10000 20000 35000
JAN 31	PURCHASES ACCOUNT DR.			6500