Which entry records a credit purchase?

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

Answer: (D)

When goods are bought on credit, you’re increasing what you’ve purchased (an expense or inventory) and you’re creating a liability to pay the supplier later. The correct double-entry is to debit Purchases (to reflect the increase in what you’ve acquired) and credit Trade Creditors (to record the amount you owe). That matches the idea of incurring a purchase on credit.

The other options would not accurately reflect a credit purchase: debiting Trade Creditors and crediting Purchases would reduce your liability and increase purchases in the opposite way, which is not how a credit purchase is recorded. Debiting Bank and crediting Purchases would be used for a cash purchase, not a credit one.