CA Foundation Exam > CA Foundation Questions > Machinery was purchased for Rs. 10,000 and Rs...
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Machinery was purchased for Rs. 10,000 and Rs. 500 paid as wages for erection of machinery? The account that should be debited is :
- a)Wages A/c
- b)Machinery A/c
- c)Repairs A/c
- d)None
Correct answer is option 'B'. Can you explain this answer?
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Machinery was purchased for Rs. 10,000 and Rs. 500 paid as wages for e...
Debit and Credit are two basic terms of accounting. When a transaction takes place, it affects at least two accounts. One account is debited while another account is credited. In this case, machinery was purchased for Rs. 10,000 and Rs. 500 paid as wages for erection of machinery. The account that should be debited is Machinery A/c.
Explanation:
Machinery is an asset. Assets are the resources owned by the business which are used for generating revenue. The purchase of machinery for Rs. 10,000 is a capital expenditure. Capital expenditures are those expenditures that are incurred for acquiring fixed assets or increasing their earning capacity. As machinery is a fixed asset, it is debited to Machinery A/c.
Wages are the expenses incurred by the business for the services rendered by the employees. The wages paid for the erection of machinery are revenue expenditures. Revenue expenditures are those expenditures that are incurred for maintaining the earning capacity of the business. As wages are an expense, it is debited to Wages A/c.
Hence, the correct answer is Machinery A/c.
Explanation:
Machinery is an asset. Assets are the resources owned by the business which are used for generating revenue. The purchase of machinery for Rs. 10,000 is a capital expenditure. Capital expenditures are those expenditures that are incurred for acquiring fixed assets or increasing their earning capacity. As machinery is a fixed asset, it is debited to Machinery A/c.
Wages are the expenses incurred by the business for the services rendered by the employees. The wages paid for the erection of machinery are revenue expenditures. Revenue expenditures are those expenditures that are incurred for maintaining the earning capacity of the business. As wages are an expense, it is debited to Wages A/c.
Hence, the correct answer is Machinery A/c.
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Machinery was purchased for Rs. 10,000 and Rs. 500 paid as wages for e...
From Machinery purchased to its installation
All the expenses were added in machinery A/C
All the expenses were added in machinery A/C
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Machinery was purchased for Rs. 10,000 and Rs. 500 paid as wages for erection of machinery? The account that should be debited is :a)Wages A/cb)Machinery A/cc)Repairs A/cd)NoneCorrect answer is option 'B'. Can you explain this answer?
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