When Purchases of Merchandise Are Made for Cash, the Transaction

question 179

Multiple Choice

When purchases of merchandise are made for cash, the transaction may be recorded with the following entry

• A) debit Cash; credit Merchandise Inventory
• B) debit Merchandise Inventory; credit Cash
• C) debit Merchandise Inventory; credit Cash Discounts
• D) debit Merchandise Inventory; credit Purchases

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Definitions:

Bank Service Charges

Fees charged by banks for handling transactions, maintaining accounts, and providing other financial services.

NSF Check

A check that cannot be processed because the account on which it is drawn lacks sufficient funds, standing for "non-sufficient funds."

Bank Reconciliation

The process of comparing and matching the balances of an entity's accounting records with corresponding bank statements to ensure accuracy.

Journal Entry

A record in the accounting ledger that notes every financial transaction of a business, including the accounts affected and the date of the transaction.