Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 21 - No. 36)

What is the journal entry when a business buys inventory on credit?

Debit Inventory, Credit Cash

Debit Cash, Credit Inventory

Debit Inventory, Credit Accounts Payable

Debit Accounts Payable, Credit Inventory

This journal entry recognizes the increase in inventory and the increase in the liability to the supplier.