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GCE Financial Accounting 1990 Question 47

Question 47

Control Accounts

What are the entries of posting credit purchases into the Purchases Ledger Control Acount?

  1. A.Debit Purchases Ledger Control Account only
  2. B.Debit both Purchases Account and Purchases Ledger Control Account
  3. C.Credit Purchases Account, Debit Purchases Ledger Control Account
  4. D.Credit both Purchases Ledger Control Account and the Purchases Account
  5. E.Debit Purchases Account, credit Purchases Ledger Control Account.
Show the answer and explanation

Answer: E (Debit Purchases Account, credit Purchases Ledger Control Account.)

Explanation

Credit purchases increase what we owe suppliers: debit purchases, credit the purchases ledger control account.