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What Two Accounts Are Affected When A Business Purchases Merchandise For Cash Purchased merchandise or goods purchased for cash journal entry is usually recorded by a debited to a Purchases Account and a credit to a Cash Account or Bank Account (if the payment is made through check or cheque). Example, Mr. A is a sole owner of his business purchased merchandise for cash Rs. 5000 from the supplier, Mr. B. What is the journal entry for Cash Purchases and what is the effect of cash purchases transaction on the accounting equation? The journal entry to record for cash purchases is shown below:                                                                             Purchases a/c  5000                             ...