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The purchase of Supplies On Account / Credit is recorded in the Purchases Journal as it is related to credit purchase or purchases on account of supplies. The journal entry to record is shown below:                                                            Supplies a/c  XXX                                                                                        Accounts Payable a/c  XXX                                                          (Purchased Supplies On Account)   The supplies account is a current asset, so it is transferred to supplies ledger’s account while accounts payable is a current liability and posted to Accounts Payable Ledger’s Account. So, the purchase of supplies on account is recorded in Purchases Journal only as it is specifically related to credit purchase of supplies and not in cash journal and General Journal

Debits Increase Assets And Decrease Liabilities According to  Rules of Debit And Credit , with every debit amount added to an asset account, it increases it as it is a normal, usual, positive or favorable balance for asset accounts while with every debit amount added to a liability account, it decreases it as it is unusual, unfavorable or negative for liability accounts. Credits Decrease Assets And Increase Liabilities Credit Decrease Assets and Increase Liabilities as negative, unusual or unfavorable balance for assets is credit and credit balance for liabilities is normal, usual, positive or favourable, so liabilities increase with a credit amount. For example, a company purchased asset of Rs. 50000 on account increased the asset account as it is increasing, so we debit it and increased creditor / accounts payable as a liability account, so we credit such liability account. Following journal entry is recorded as shown below:                                            

The purchase of Supplies for cash affects supplies account and cash or bank account. For Example, if a company purchased supplies for cash / bank Rs. 5000, the following journal entry is recorded as shown below:                                                        Supplies a/c  5000                                                                               Cash a/c / Bank a/c  5000                                                          (Supplies Purchased For Cash / Bank) As supplies, being a current asset, is increasing, so we debit it and cash or bank account as a current asset is decreasing, so we credit it. So, the purchase of supplies for cash / bank account results in an increase in supplies account and a decrease in cash or bank account.

The purchase of an asset account for Cash or Bank affects asset account and cash / bank account but the Total Assets on Accounting Equation or Balance Sheet remain unchanged. For example, if a company purchased furniture for cash / bank Rs. 50000, then we record the following entry as shown below:                                                              Furniture a/c  50000                                                                                          Cash a/c / Bank a/c  50000                                                                 (Purchased Furniture For Cash / Bank)   Here two accounts are involved in this Business Transaction . One is furniture account, which is a fixed asset, and since it is increasing, so we debit it. The other account is cash or bank account, which is a Current Asset, and as it is decreasing, so we credit it. Now, we see why total assets remain unchanged? Suppose, total assets is Rs. 800000, then, we have: Total Asset

Prepaid Expenses are expenses paid in advance against which still the services or benefits are not received while Preliminary Expenses are incurred in order to start or establish a new business. These are necessary initial expenses in order to start a new business. Prepaid Expenses are current assets and recorded on asset side of balance sheet while preliminary expenses are expenses recorded in Income Statement under the section of miscellaneous expenses for the period. Examples of prepaid expenses are Prepaid Rent, Prepaid Salary, etc., while Examples of preliminary expenses are Registration Expenses, Legal Expenses, Professional Expenses, etc., paid to register and start a new business as these are necessary for its incorporation. Prepaid Expenses are also called expenses paid in advance or Unexpired Expenses. Preliminary Expenses are also known as Initial Expenses, Primary Expenses and Pre-Operative Expenses.