Purchases are Debited when?ans.Goods are purchased on cashGoods are lostGoods are purchased on creditGoods are sold at a discount Previous Marked for Review Next
Question
Purchases are Debited when?ans.Goods are purchased on cashGoods are lostGoods are purchased on creditGoods are sold at a discount Previous Marked for Review Next
Solution
Purchases are debited in the following situations:
-
When goods are purchased on cash: This is because the company is spending cash to acquire new inventory, which is an increase in expenses (debits increase expenses).
-
When goods are lost: If goods are lost, the company would record this as a loss or expense, which would be a debit.
-
When goods are purchased on credit: When a company purchases goods on credit, it is increasing its accounts payable (a liability), but it is also increasing its inventory (an asset). The increase in inventory is recorded as a debit.
-
When goods are sold at a discount: When goods are sold at a discount, the company is receiving less cash than the value of the goods sold. This difference is recorded as a discount given, which is an expense and therefore a debit.
Similar Questions
Under the periodic inventory system, the account debited to record the cost of merchandise purchased is*a. Purchasesb. Purchase Discountc. Merchandise Inventoryd. Purchase returns and allowances
Sold 100 coupons books for $15 each, each book contain 10 coupons that enable the holder to one round of minature golf or to hit one bucket of golf balls. What is debit? what is credit?
Under a perpetual inventory system, acquisition of merchandise for resale is debited to:Group of answer choicesthe Cost of Sales account.the Purchases account.the Supplies account.the Inventory account.
Determine which letter is the correct answer. 1. It is a transfer of merchandise from one business or individual to another in exchange for cash or a promise to pay. a. purchases b. sale c. order d. discount 2. When cash is immediately received as full payment for merchandise sold, it is called a what? a. cash discount b. cash discounted c. cash sales d. cash debit 3. A document issued by the seller when collection is made. a. collection receipt b. sales invoice c. purchase order d. check 4. Price reductions granted to customers because of defects or other problems with the unreturned merchandise are called what? a. accounts receivable b. sales returns c. sales allowances d. sales discounts 5. Sales returns and allowances is a contra account of a. sales b. purchases c. allowances d. returns 6. The term when total amount due shall be paid within 30 days from the date of purchased. b. 3/com c. n/30 d. 3/10, 2/15, n/30 a. 3/10, n/30 7. It means 20% trade discount. 3% cash discount if the account is paid within 10 days, net amount due shall be paid within 30 days. a. 3/10, 2/15, n/30 b. n/307 c. 3/10, n/30 d. 20, 3/10, n/30 8. It means 20% and 25% trade discount, 3% cash discount if the account is paid within 10 days, net amount due shall be paid within 30 days. a. 3/10, 2/15, n/30 b. n/30 c. 3/10, n/30 d. 20 and 25, 3/10, n/30 9. A term that the buyer bears the transportation cost. a. Freight-In b. Freight-Out c. discounts d. FOB shipping point 10 A term that the seller bears the transportation cost. a. FOB destination b. Freight collect c. Freight prepaid d. Freight-out 11. A term that the shipping or forwarding company is going to collect the transportation cost to the buyer, though the seller bears the transportation cost. a. FOB shipping point freight collect b. FOB shipping point freight prepaid c. FOB destination freight collect d. FOB destination freight prepaid
A cash discount is provided on:Question 2Answera.Salesb.Prompt paymentc.Cash purchasesd.Purchases
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.