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ACCA Applied Knowledge · Financial Accounting · Double-entry bookkeeping principles including the maintenance of accounting records

A business buys a delivery van on credit from a motor dealer for $18,000. Which statement is correct about recording this transaction?

The van purchase is recorded in the journal, debiting the vans non-current asset account and crediting the dealer as a payable. The purchases day book is reserved for goods for resale, and no cash is paid yet, so the cash book is not used.

  1. AIt is recorded in the purchases day book and posted to the purchases account
  2. BIt is recorded in the journal, debiting vans (non-current assets) and crediting the dealer as a payableCorrect
  3. CIt is recorded in the cash book because a van is a significant purchase
  4. DIt is recorded in the sales day book as a credit transaction

Explanation

The purchases day book is only for goods bought for resale. A non-current asset bought on credit is a non-routine item, so it goes through the journal: debit vans $18,000, credit the dealer's payable account. No cash has moved, so the cash book is not used.

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