Which entry records the receipt of material purchases from suppliers?

Which entry records the receipt of material purchases from suppliers?

• A. Dr Materials, Cr Production
• B. Dr Materials, Cr Payables Or Bank
• C. Dr Overheads, Cr Materials
• D. Dr Materials Cost A/C, Cr Payable

Answer: (B)

When materials are received from suppliers, the transaction increases the materials inventory (an asset) and creates a liability if bought on credit, or reduces cash if paid immediately. In double-entry terms, you debit the asset and credit the supplier payable (or Bank if paid right away). That is why recording the receipt as Dr Materials and Cr Payables Or Bank is correct. It captures the rise in materials on hand and the obligation to pay the supplier (or the outflow of cash if paid). The other options misplace where the increase is recorded: transferring to production would occur when materials are issued to production, not at purchase; recording to overheads would relate to applying materials to overhead costs rather than recognizing the purchase; and using a Materials Cost account is not the standard asset-based recording for receiving materials.

When materials are received from suppliers, the transaction increases the materials inventory (an asset) and creates a liability if bought on credit, or reduces cash if paid immediately. In double-entry terms, you debit the asset and credit the supplier payable (or Bank if paid right away).

That is why recording the receipt as Dr Materials and Cr Payables Or Bank is correct. It captures the rise in materials on hand and the obligation to pay the supplier (or the outflow of cash if paid).

The other options misplace where the increase is recorded: transferring to production would occur when materials are issued to production, not at purchase; recording to overheads would relate to applying materials to overhead costs rather than recognizing the purchase; and using a Materials Cost account is not the standard asset-based recording for receiving materials.