Question

What is a firm’s payment to a supplier for merchandise inventory recorded in?

Options

• Cash payment journal

• Purchases journal

• Sales journal

• Cash receipts journal

Answer 1

Cash payment journal

Explanation:

A firm’s payment to a supplier is a cash disbursement (a payment), so it’s recorded in the cash payments (cash disbursements) journal; the purchases journal is used for credit purchases (not the subsequent cash payment), while the sales journal and cash receipts journal record sales and incoming cash, respectively. This is confirmed in the provided study material.