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An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?
- a)Rs. 1,20,000
- b)Rs. 5,40,000
- c)Rs. 6,60,000
- d)Nil
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 an...
Calculation of the effect on fixed assets:
- Fixed asset purchased for Rs. 6,60,000
- Cash payment made of Rs. 1,20,000
- Balance payment made through a bill drawn for 60 days
Explanation:
The purchase of the fixed asset will have no direct effect on the fixed assets account. However, the payment made and the bill drawn will have an impact on the fixed assets account. Here's how:
- Cash payment of Rs. 1,20,000: This will reduce the cash balance of the business but will not affect the fixed assets account.
- Bill drawn for Rs. 5,40,000 (Rs. 6,60,000 - Rs. 1,20,000): This represents the amount payable for the purchase of the fixed asset. Since the bill is drawn for 60 days, it will be recorded in the books as a liability under the head 'Bills Payable'. It will not affect the fixed assets account.
Therefore, the total effect on the fixed assets account is the purchase of the asset for Rs. 6,60,000.
- Fixed asset purchased for Rs. 6,60,000
- Cash payment made of Rs. 1,20,000
- Balance payment made through a bill drawn for 60 days
Explanation:
The purchase of the fixed asset will have no direct effect on the fixed assets account. However, the payment made and the bill drawn will have an impact on the fixed assets account. Here's how:
- Cash payment of Rs. 1,20,000: This will reduce the cash balance of the business but will not affect the fixed assets account.
- Bill drawn for Rs. 5,40,000 (Rs. 6,60,000 - Rs. 1,20,000): This represents the amount payable for the purchase of the fixed asset. Since the bill is drawn for 60 days, it will be recorded in the books as a liability under the head 'Bills Payable'. It will not affect the fixed assets account.
Therefore, the total effect on the fixed assets account is the purchase of the asset for Rs. 6,60,000.
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An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 an...
Fixed asset increased by 660000 as asset purchased cash is paid for this which is current asset and not fixed asset that's why c
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An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?a)Rs. 1,20,000b)Rs. 5,40,000c)Rs. 6,60,000d)NilCorrect answer is option 'C'. Can you explain this answer?
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An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?a)Rs. 1,20,000b)Rs. 5,40,000c)Rs. 6,60,000d)NilCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?a)Rs. 1,20,000b)Rs. 5,40,000c)Rs. 6,60,000d)NilCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for An asset was purchased for Rs. 6,60,000. Cash was paid Rs. 1,20,000 and for the balance a bill was drawn for 60 days. What will be the effect on fixed assets?a)Rs. 1,20,000b)Rs. 5,40,000c)Rs. 6,60,000d)NilCorrect answer is option 'C'. Can you explain this answer?.
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