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CS Executive · Corporate Accounting and Financial Management · Introduction to Accounting

Mehta Traders purchased office furniture on credit from Shree Interiors for Rs 45,000. In which book of original entry should this transaction be recorded?

It is recorded in the Journal Proper. The Purchases Book is meant only for credit purchases of goods held for resale, whereas furniture is a fixed asset. Hence a credit purchase of furniture is journalised by debiting Furniture and crediting the supplier.

  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. Furniture is a fixed asset, so a credit purchase of it is recorded in the Journal Proper (Furniture A/c Dr, Shree Interiors A/c Cr). Recording it in the Purchases Book would wrongly inflate trading purchases.

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