Question

briefly describe the situations in which purchases account is credited.​

Answer 1

Explanation:

First you have to know when purchase account is debited, then only you can understand when to credit it.

Purchase account is just a name for goods purchased for the purpose of sales, so it is debited when goods are bought.

It is credited when goods are returned to suppliers or if it is donated or taken by owner or if it is destroyed etc.. It means that purchase account is credited when goods bought for selling purpose is not used for that purpose.

Hope your doubt is clarified

Answer 2

ANSWER :

$\: \: \: \: \: \: \: \: \: \:$Generally, in accounting, Purchases Account is debited. But there are some situations, in which Purchases Account is credited.

✠ The situations where Purchases Account is credited a mentioned below :-

• [1] Purchases Return of Goods :- When goods purchases for resale are returned to the seller by the business; then Purchase Account is credited. The entry is :-

$\bigstar \: \: \tt{Purchases \: \: Return \: \: A/C \: \: \: \: \: \: \: \: \: \: \: \: Dr.} \\ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \tt{To \: \: Purchases \: \: A/C}$

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• [2] Drawings of Goods :- When goods is taken by the proprietor from the business for personal use; then Purchases Account is credited. The entry is :-

$\bigstar \: \: \tt{ Drawings \: \: A/C \: \: \: \: \: \: \: \: \: \: \: \: Dr.} \\ \: \: \: \: \: \: \: \: \tt{To \: \: Purchases \: \: A/C}$

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• [3] Goods Given as Charity :- When a portion of goods purchased for resale are given as charity; then Purchases Account is credited. The entry is :-

$\bigstar \: \: \tt{Charity \: \: A/C \: \: \: \: \: \: \: \: \: \: \: \: Dr.} \\ \: \: \: \: \: \: \: \: \tt{To \: \: Purchases \: \: A/C}$

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• [4] Goods Distributed as Free Sample :- When a portion of goods purchased for resale is distributed as free sample; then Purchases Account is credited. The entry is :-

$\bigstar \: \: \tt{Free \: \: Sample \: \: A/C \: \: \: \: \: \: \: \: \: \: \: \: Dr.} \\ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \tt{To \: \: Purchases \: \: A/C}$

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• [5] Abnormal Loss of Goods :- When goods are lossed due to abnormal reasons such as goods stolen, lost in flood, lost in fire etc.; then Purchases Account is credited. The entry is :-

$\bigstar \: \: \tt{Abnormal \: \: Loss \: \: A/C \: \: \: \: \: \: \: \: \: \: \: \: Dr.} \\ \: \: \: \: \: \: \: \: \: \: \: \: \: \: \: \tt{To \: \: Purchases \: \: A/C}$