Antics Electronic Company recently bought six generators. Which of the following is the correct method of recording this transaction?
A. Debit generator account and credit cash account B. Debit purchases account and credit cash account C. Debit cash accounts and credit purchases account D. Debit cash account and credit generator account
Correct Answer: B
Explanation
An electronic shop bought generators (for resale and not personal use). this means cash account will be credited because money has gone out of the business for the purchase of generators. And in return, purchase account (stock) will be debited because goods have come into the company in leu of the purchase. Remember this simple accounting entry; debit all receivables (purchases account receiving),credit all payment(cash account paying out)..
