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Question

Which ledger entries record the purchase of a machine bought on credit?

A
debit creditors, credit machinery
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B
debit creditors, credit purchases
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C
debit machinery, credit creditors
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D
debit purchases, credit creditors
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Solution

The correct option is C debit machinery, credit creditors
Dual concept of accounting defines that every business transaction affects two account i.e. debit and credit.
Machinery purchased on credit gives affect two accounts i.e. Machinery and the supplier.
Following the rule of real account (Machinery) and personal account (Creditors), accounting entry will be as under:

Machinery A/c Dr.
To Creditors.

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