When purchase account is credited?

The correct answer is: A. When goods are purchased on credit.

Purchase account is a liability account that is used to record the cost of goods that a company purchases on credit. When a company purchases goods on credit, it is essentially borrowing money from the supplier. The purchase account is credited when the goods are received and the liability is recorded.

The other options are incorrect because:

• Option B: When goods are purchased on cash, the cash account is debited and the purchase account is credited.
• Option C: When goods are sold, the accounts receivable account is debited and the sales account is credited.
• Option D: When goods are taken by proprietor for personal use, the drawings account is debited and the inventory account is credited.