The correct answer is: C. Transactions related to credit purchase of raw material
A purchase book is a book of accounts that records all purchases made by a business. It is used to track the amount of money spent on goods and services, as well as the suppliers from whom the goods and services were purchased.
The purchase book is typically divided into two sections: cash purchases and credit purchases. Cash purchases are those that are paid for immediately, while credit purchases are those that are paid for at a later date.
The purchase book records the following information for each purchase:
- The date of the purchase
- The name of the supplier
- The amount of the purchase
- The terms of payment
- The description of the goods or services purchased
The purchase book is an important tool for businesses of all sizes. It helps businesses to track their spending, manage their cash flow, and ensure that they are paying their suppliers on time.
Here is a brief explanation of each option:
- A. Cash transactions. This option is incorrect because the purchase book does not record all cash transactions. Only cash purchases are recorded in the purchase book.
- B. Cash purchase transactions. This option is incorrect because the purchase book does not record all cash purchase transactions. Only credit purchases of raw materials are recorded in the purchase book.
- C. Transactions related to credit purchase of raw material. This option is correct because the purchase book records all transactions related to credit purchase of raw material.
- D. Credit purchase of goods. This option is incorrect because the purchase book does not record all credit purchases. Only credit purchases of raw material are recorded in the purchase book.