During January, Meera Limited Makes Credit Purchases of Goods for Resale

question 5

Multiple Choice

During January, Meera Limited makes credit purchases of goods for resale at a net cost of £42,000. Meera Limited's suppliers charge 20% VAT on the net cost of purchases. What is the correct double entry to record these credit purchases of goods for resale?

• A) Debit purchases £42,000, Debit VAT £8,400, Credit trade payables control account £50,400.
• B) Debit trade payables control account £50,400, Credit purchases £42,000, Credit VAT £8,400.
• C) Debit purchases £42,000, Debit VAT £8,400, Credit cash £50,400.
• D) Debit purchases £35,000, Debit VAT £7,000, Credit trade payables control account £42,000.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of an unfavorable condition strengthens a behavior.

Secondary Reinforcer

A stimulus that has become reinforcing through its association with a primary reinforcer, often used in behavior modification and learning.

Primary Reinforcer

An innately reinforcing stimulus like food or drink, which does not require learning to become pleasurable.

Secondary Reinforcer

A stimulus that becomes reinforcing through its association with a primary reinforcer, not through its own inherent value.