When an asset purchases what is the accounting entry?

Question

When an asset purchases what is the accounting entry?

Answer 1

Debit the Asset

Credit Cash or a payable (as applicable)

Answer 2

Cash purchases:

Dr Inventory

Cr Cash

OR

Dr Purchases

Cr Cash

Credit purchases:

Dr Inventory

Cr Accounts Payable

OR

Dr Purchases

Cr Accounts Payable

If your business use periodic inventory method, Dr Purchases, if perpetual, Dr Inventory and make sure to update inventory stock card.

If purchasing non-current asset, Dr the item e.g. machinery, furniture, land, building.. and Cr Cash or Accounts Payable.