Question

Is it typical to record a transaction where a debtor buys on account in the debtor's journal?

Options:

1.Yes, as it accounts for debtor transactions.
2.No, it belongs in the creditors' journal.
3.Yes, but it should also be recorded in the general ledger.
4.No, it's only recorded in the sales journal.

Answer 1

The transaction where a debtor buys on account is typically recorded in the sales journal, then posted to the accounts receivable ledger and summarized in the general ledger.

Step-by-step explanation:

Typically, in accounting practices, when a debtor buys on account, the transaction is not recorded in the debtor's journal. Instead, it should be recorded in the sales journal, because it is a sale made on credit. Later, this entry from the sales journal will be posted to individual debtor's account in the accounts receivable ledger, which is a subsidiary ledger. It should also be noted that all transactions recorded in the sales journal and other subsidiary ledgers eventually get summarized and posted to the general ledger. This ensures that there is a comprehensive record of all financial transactions that affect the overall financial position of the business.