Which specialized journal is used to record purchases made with cash?
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Answer: D. Cash payments journal
Explanation
Purchasing items with cash represents a direct outflow of funds from the enterprise. The cash payments journal is specifically designed to record all transactions where money leaves the business. Hence, cash purchases are logged there rather than in general purchase journals. Specialized journals organize high-frequency transactions to maintain clear accounting records. The cash payments journal tracks check disbursements, cash purchases, and creditor settlements. This system segregates cash control from credit transaction processing.
Dividing purchases into cash and credit categories helps companies monitor supplier liabilities and liquidity. It ensures that every cash outflow is systematically cross-referenced and authorized. This segregation enhances internal controls against fraudulent cash disbursements. The purchase journal is exclusively used for recording inventory bought on credit terms. The sales journal tracks revenue generated from selling goods or services to customers. The purchases return journal records merchandise sent back to suppliers.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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