When goods are purchased on account, the accounting entries are
Question 1 Report
When goods are purchased on account, the accounting entries are
Answer Details
When goods are purchased on account, it means that the payment for the goods is not made immediately but rather, the supplier or vendor expects payment at a later date. In this case, the accounting entries are:
debit purchases account, credit supplier's account
The reason for this is that the company has received goods (an asset) and has incurred a liability (the amount owed to the supplier). The purchases account is debited to record the increase in assets, and the supplier's account is credited to record the increase in liabilities. This reflects the fact that the company owes the supplier money for the goods purchased.
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