CSEET · Fundamentals of Accounting · Accounting Process
Rohan Traders purchased furniture worth Rs 40,000 on credit from Mehta Furnishers. Which journal entry correctly records this transaction?
Furniture A/c is debited and Mehta Furnishers A/c is credited by Rs 40,000. Furniture is an asset coming into the business, and since it is bought on credit, the supplier is a creditor. Purchases account is used only for goods bought for resale.
- AFurniture A/c Dr 40,000 to Mehta Furnishers A/c 40,000Correct
- BPurchases A/c Dr 40,000 to Mehta Furnishers A/c 40,000
- CMehta Furnishers A/c Dr 40,000 to Furniture A/c 40,000
- DFurniture A/c Dr 40,000 to Cash A/c 40,000
Explanation
Furniture is a real asset acquired, so it is debited. The supplier becomes a creditor (personal account), so Mehta Furnishers is credited. Debiting Purchases is wrong because furniture is not goods meant for resale; it is a fixed asset.
Did you get it right without looking?
One question tells you little. A timed set on Accounting Process shows your real accuracy, how long you take and where you lose marks.
More Accounting Process questions
- On 1 April, Anil Enterprises bought a machine for Rs 3,00,000 on credit from Vikas Ltd. It paid Rs 10,000 as freight and Rs 15,000 as instal…
- For the year ended 31 March, Kapoor Enterprises earned sales of Rs 6,00,000, of which Rs 50,000 is yet to be received in cash. Expenses paid…
- Anita, the proprietor of Anita Garments, takes goods costing Rs 5,000 from the shop for her family's use and makes no entry. Which concept i…
- Goods worth ₹12,000 are purchased on credit from Mehta & Co. Where is this entry posted in the ledger?
- Sunita, the proprietor of a firm, took goods costing Rs 6,000 from the business for personal use. The journal entry is:
- Gupta & Co. has a bank overdraft of ₹18,000 as per the cash book. Cheques issued of ₹6,000 are not yet presented, and cheques deposited of ₹…