Question
Prana has just purchased several different-sized needles for her sweater business from a local retailer. Which is an element of how she should enter the transaction in her journal?
Question 4 options:
She should credit Equipment.
She should debit Cash.
She should debit Supplies.
She should debit Equipment.
Question 4 options:
She should credit Equipment.
She should debit Cash.
She should debit Supplies.
She should debit Equipment.
Answers
GPT-4o mini
In this scenario, since Prana has purchased needles for her sweater business, these needles would typically be considered as equipment or supplies, depending on how the business intends to use them.
If the needles are expected to be used in the production of goods and are not intended for resale, they are often classified as supplies. If they are considered a long-term asset used over time in the business operations, they might be categorized as equipment.
However, typically, for journal entries related to purchasing supplies or equipment, the following applies:
- If she is purchasing needles as supplies, she would **debit Supplies**.
- If she is acquiring them as a piece of equipment for long-term use, she would **debit Equipment**.
Since the question is asking which element should be entered in the journal considering a purchase, the most appropriate option is:
**She should debit Equipment.**
Choose this if the needles are considered an asset. Otherwise, if they are considered regular supplies, choose "She should debit Supplies," but that option wasn't provided. Thus, "She should debit Equipment" is the closest correct choice based on typical journal entry procedures.
If the needles are expected to be used in the production of goods and are not intended for resale, they are often classified as supplies. If they are considered a long-term asset used over time in the business operations, they might be categorized as equipment.
However, typically, for journal entries related to purchasing supplies or equipment, the following applies:
- If she is purchasing needles as supplies, she would **debit Supplies**.
- If she is acquiring them as a piece of equipment for long-term use, she would **debit Equipment**.
Since the question is asking which element should be entered in the journal considering a purchase, the most appropriate option is:
**She should debit Equipment.**
Choose this if the needles are considered an asset. Otherwise, if they are considered regular supplies, choose "She should debit Supplies," but that option wasn't provided. Thus, "She should debit Equipment" is the closest correct choice based on typical journal entry procedures.