Practice question · Multiple choice
A trainee books a purchase: Dr Cash 300, Cr Inventory 300. What went wrong?
Hints
- When you buy inventory, does inventory go up or down?
- Inventory is an asset, assets grow with debits.
Show the answer
A. The debits and credits are reversed
Why
Buying inventory increases the inventory asset (debit) and decreases cash (credit). The trainee recorded the mirror image, a balanced entry that tells the wrong story.
Practise Double-Entry Bookkeeping
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