The Entry to Record a Purchase of Merchandise on Credit

question 84

Multiple Choice

The entry to record a purchase of merchandise on credit includes

• A) a debit to Purchases and a credit to Accounts Receivable.
• B) a credit to Purchases and a credit to Accounts Payable.
• C) a debit to Accounts Payable and a credit to Purchases.
• D) a debit to Purchases and a credit to Accounts Payable.

---

Definitions:

Risk Premium

The additional return required by investors for taking a higher level of risk, compared to a safer investment.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Inflation

The rate at which the aggregate price level for goods and services grows, weakening the purchasing strength.

Portfolio

An assortment of financial assets such as equities, debt securities, raw materials, liquid cash, and near-cash items, comprising both mutual funds and exchange-traded funds.