Answer (A) is correct . The correct entry to record a purchase of materials on account is to increase the appropriate asset and liability accounts. Materials are charged to an inventory; the corresponding liability is accounts payable. The asset account(s) could be stores control and/or supplies or a number of other accounts. Also, subsidiary ledgers may be used to account for various individual items (a perpetual inventory system). The term control implies that a subsidiary ledger is being used.
Answer (B) is incorrect because The entry to record the return of materials to suppliers debits accounts payable and credits raw materials inventory.
Answer (C) is incorrect because This entry reclassifies credit balances in accounts receivable as liabilities or debit balances in accounts payable as assets.
Answer (D) is incorrect because This entry would record the purchase of materials for cash.
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