Question

Purchased goods for paying cash
Journal entries

Answer 1

Answer:

In the case of goods purchased for cash (cash purchase), cash goes out of the business. Purchase a/c will be debited as it is an expense. Golden rules for Nominal accounts says 'Debit all expenses/losses' (refer golden rule for nominal accounts in the link above).

Answer 2

Cash purchases occur when a firm purchases goods or renders the services and then makes the payment by cash immediately.

Explanation:

When the firm purchases goods from the supplier, then following things occur in the books of account:

• On the one side, in books of accounts, the purchases account will be debited as the firm’s inventory (assets) would be increased.
• And, on the other side, if the goods are purchased in cash, then cash account will be credited.

Journal Entry in the books of Accounts is as follows:

Purchases A/c                  Dr.        

              To Cash A/c