Recording Credit

Question 1

Where is a credit purchase recorded?

Answer 1

Primarily recorded in the purchases day book which details the names and references in relation to the supplier we have brought goods from or received a service from on credit

Question 2

What are the total of the purchase day book used for

Answer 2

To preform the double entry to enter into the general ledger on a timely basis.

Question 3

What do you have to include when recording a credit purchase?

Answer 3

The recognition of a payable, a purchase expense and an amount of VAT to be paid but which ca;be offset against the VAT liability to HMRC

Question 4

What does the purchases daybook get reproduced alongside

Answer 4

Summarise of the accounting entries required to the general ledger

Question 5

The accounting entries for a credit purchase with VAT are

Answer 5

Debit purchases account with the net amount
Debit vat account with the VAT
Credit payables account with the gross amount

Question 6

What have the purchases been debited with

Answer 6

The net amount as the VAT is not a cost to the business

Question 7

What is the payable account credited with

Answer 7

The gross amount as this is the amount that must be paid to the supplier