paid for goods purchases would affect what two accounts

Expert Solution

Answer :

Purchases can be of 2 types

1)Cash purchases

2)Credit purchases

In purchases expenses increases and asset decreases... Purchase is not associated with inventory.

In cash purchase, the purchase(income statement) is debited and cash is credited, purchase is debited to the account for increase in expenses and cash is credited for decrease in cash of the entity.

In credit purchase, the purchase(income statement) is debited and payable is credited, purchase is debited to the account for increase in expenses and payable is credited for increasing the liability of the entity.

When the payable is paid his dues, payable is debited and cash is credited.

The accounts that are affected from payment of goods purchases are 1) for cash purchase : - purchases account in income statement and cash in assets.

2) for credit purchase : - payable account in liabilities and cash in assets are affected while payment for the goods purchased are made.

ekkarill92 answered 1 year ago

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