Nwoye buys stock and pays by cheque. The entries in the b...
Nwoye buys stock and pays by cheque. The entries in the books of Nwoye is Debit
Purchases; Credit cheque
Purchases; Credit bank
Bank; Credit Purchases
Cheque; Credit Purchases
Correct answer is B
To answer this question, note that whatever comes into the business is recorded on the debit side, and whatever goes out is recorded on the credit side.
''Nwoye buys stock and pays by cheque''. The entries in the books of Nwoye is, debit Purchases and Credit bank. what this accounting entry means is that, money had gone out of the business by virtue of the cheque that was issued to a seller by nwoye for the purchase of stocks (goods) for resale and in return, goods were given to Nwoye (goods have come into the business after payment was made by cheque). Always remember the principle of double entry which states that, for every credit entry, they must be a corresponding debit entry vice versa.
NOTE: in accounting, purchases are goods that are bought for the purpose of reselling.
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