How would you record a purchase on credit that affects the Purchases account?

• A. Dr Purchases; Cr Trade Creditors.
• B. Dr Trade Creditors; Cr Purchases.
• C. Dr Purchases; Cr Bank.
• D. Dr Bank; Cr Purchases.

Answer: (A)

When you record a purchase made on credit, you are increasing your costs (Purchases) and creating a liability to the supplier (Trade Creditors). In double-entry terms, increases are shown by a debit and increases in liabilities by a credit. So you debit Purchases to reflect the higher expense, and you credit Trade Creditors to show you owe money. If you later pay the supplier, the entry would flip to debit Trade Creditors (reducing the liability) and credit Bank (reducing cash).

Other options would either reflect paying cash at the time of purchase or would incorrectly increase or decrease the wrong side of the entry.