Tolu purchased a machine for ₦6,000 on credit. The effect is to debit………………. and credit the account of the supplier
Tolu purchased a machine for #6,000 on credit. The effect is to debit………………. and credit the account of the supplier
Explanation
When Tolu purchases a machine for ₦6,000 on credit, the correct entry is to debit the Machinery account and credit the Supplier’s account. The question asks what account is debited.
In double-entry bookkeeping, when you acquire an asset, you debit the asset account. Machinery is a fixed asset, so the machinery account increases (debit) by ₦6,000 to record the new equipment owned.
The credit entry goes to the supplier’s account (a creditor) because Tolu now owes money for the machine. This increases the liability to the supplier.
Cash is not debited because no cash was paid – this is a credit purchase. Creditor account is credited, not debited. Debtor account relates to customers who owe the business money, which is not relevant here.