If raw materials are purchased with cash, which account is credited in the journal entry?

If raw materials are purchased with cash, which account is credited in the journal entry?

• A. Raw Materials
• B. Cash
• C. Accounts Payable
• D. Revenue

Answer: (B)

When you buy raw materials with cash, you’re exchanging one asset for another, so the journal records reflect that change. In double-entry bookkeeping, increases to assets are recorded as debits and decreases as credits. Paying cash decreases your Cash balance, so Cash is credited. At the same time, the raw materials you now own increase your asset base, so you debit the Raw Materials account. For example, if the cost is $5,000, you’d record: Debit Raw Materials $5,000; Credit Cash $5,000. The other accounts don’t apply here: Accounts Payable would be used if you bought on credit, Revenue isn’t affected by purchasing supplies, and Raw Materials would be increased (debited), not credited.

When you buy raw materials with cash, you’re exchanging one asset for another, so the journal records reflect that change. In double-entry bookkeeping, increases to assets are recorded as debits and decreases as credits. Paying cash decreases your Cash balance, so Cash is credited. At the same time, the raw materials you now own increase your asset base, so you debit the Raw Materials account.

For example, if the cost is $5,000, you’d record: Debit Raw Materials $5,000; Credit Cash $5,000.

The other accounts don’t apply here: Accounts Payable would be used if you bought on credit, Revenue isn’t affected by purchasing supplies, and Raw Materials would be increased (debited), not credited.