Purchases of merchandise are

Question

Quizplus · Accepted Answer

Purchases of merchandise are debited to Purchases account, which is a sub-account of cost of goods sold. This is because purchases represent the cost incurred by a business to acquire inventory for resale. Option A is incorrect because while purchases do affect Merchandise Inventory, they are not directly credited or debited to this account. Option B is incorrect because purchases are not credits to Merchandise Inventory. Option D is incorrect because purchases are not related to sales, which are transactions when goods are sold to customers.

Purchases of Merchandise Are