Which of the following statements is correct?

Question

Quizplus · Accepted Answer

This statement is correct. A cash purchase of merchandise would result in a debit to Purchases and a credit to Cash. Option A is incorrect because the entry to record payment of an invoice within the cash discount period would include a credit to the Purchases Discounts account, not a debit. Option C is incorrect because a transaction recorded in the cash payments journal would include a debit to the relevant expense account and a credit to Cash. Option D is incorrect because Purchase Discounts is a contra expense account, not a contra revenue account.

Which of the Following Statements Is Correct