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CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle

In which subsidiary book would a trader first record the purchase of office furniture on credit from a furniture dealer?

Credit purchase of office furniture is recorded in the Journal Proper. The Purchases Book is reserved for credit purchases of goods meant for resale, so assets bought on credit, such as furniture, are entered as a journal entry instead.

  1. APurchases Book
  2. BJournal ProperCorrect
  3. CCash Book
  4. DSales Book

Explanation

The Purchases Book records only credit purchases of goods meant for resale. Credit purchase of an asset such as furniture is not a trading purchase, so it is recorded in the Journal Proper. The Sales Book and Cash Book do not apply, as this is neither a sale nor a cash transaction.

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