What is the normal balance for the Purchases account?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

What is the normal balance for the Purchases account?

Explanation:
Normal balance means the side of the account that increases it. Purchases is treated as an expense (the cost of goods bought for use or resale), and expenses increase on the debit side. So the Purchases account normally shows a debit balance. When you record a purchase, you debit Purchases and credit Cash or Accounts Payable. If you return items or get a discount, that reduces Purchases through credits or a contra-expense adjustment. In short, Purchases increases with debits, so its normal balance is on the debit side.

Normal balance means the side of the account that increases it. Purchases is treated as an expense (the cost of goods bought for use or resale), and expenses increase on the debit side. So the Purchases account normally shows a debit balance. When you record a purchase, you debit Purchases and credit Cash or Accounts Payable. If you return items or get a discount, that reduces Purchases through credits or a contra-expense adjustment. In short, Purchases increases with debits, so its normal balance is on the debit side.

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