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If wages are paid for construction of business premises, ________ A/c is credited and ____ A/c is debited.
- a)Wages, Cash
- b)Premises, Cash
- c)Cash, Wages
- d)Cash, Premises
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
If wages are paid for construction of business premises, ________ A/c ...
If wages are paid for construction of business premises the amount of wages will be debited to the premises account because, according to IFRS, any expense that brings the asset to use or brings the asset in existence should be added to the cost of that machinery.
Cash account is credited because cash is being paid for incurring the wages.
Most Upvoted Answer
If wages are paid for construction of business premises, ________ A/c ...
Accounting for Construction of Business Premises
When a business constructs its own premises, it incurs several expenses such as wages paid to workers, purchase of raw materials, etc. The accounting treatment for these expenses is as follows:
Wages Paid for Construction of Business Premises
- When wages are paid to workers for the construction of business premises, the Wages A/c is credited as it is an expense for the business.
- The Cash A/c is debited as it is an outflow of cash from the business.
Example: If a business pays $10,000 in wages for the construction of its premises, the following journal entry is recorded:
Wages A/c $10,000
To Cash A/c $10,000
Construction of Business Premises
- When a business constructs its own premises, the Premises A/c is debited as it is an asset for the business.
- The Cash A/c is credited as it is an outflow of cash from the business.
Example: If a business constructs a building for $100,000, the following journal entry is recorded:
Premises A/c $100,000
To Cash A/c $100,000
Conclusion
In conclusion, when wages are paid for the construction of business premises, the Wages A/c is credited, and the Cash A/c is debited. When a business constructs its own premises, the Premises A/c is debited, and the Cash A/c is credited.
When a business constructs its own premises, it incurs several expenses such as wages paid to workers, purchase of raw materials, etc. The accounting treatment for these expenses is as follows:
Wages Paid for Construction of Business Premises
- When wages are paid to workers for the construction of business premises, the Wages A/c is credited as it is an expense for the business.
- The Cash A/c is debited as it is an outflow of cash from the business.
Example: If a business pays $10,000 in wages for the construction of its premises, the following journal entry is recorded:
Wages A/c $10,000
To Cash A/c $10,000
Construction of Business Premises
- When a business constructs its own premises, the Premises A/c is debited as it is an asset for the business.
- The Cash A/c is credited as it is an outflow of cash from the business.
Example: If a business constructs a building for $100,000, the following journal entry is recorded:
Premises A/c $100,000
To Cash A/c $100,000
Conclusion
In conclusion, when wages are paid for the construction of business premises, the Wages A/c is credited, and the Cash A/c is debited. When a business constructs its own premises, the Premises A/c is debited, and the Cash A/c is credited.
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If wages are paid for construction of business premises, ________ A/c ...
Answer is d,because according to rules wages are paid means paying cash so there are cash goes out and business premises will be debit
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If wages are paid for construction of business premises, ________ A/c is credited and ____ A/c is debited.a)Wages, Cashb)Premises, Cashc)Cash, Wagesd)Cash, PremisesCorrect answer is option 'D'. Can you explain this answer?
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