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Basics of Profit or Loss Account

Cartage paid ...

Question

Cartage paid on the purchase of a new machine is debited to_________.

A

Cartage account

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B

Profit and loss account

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C

Machine account

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D

Capital account

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Solution

The correct option is C Machine account
A machinery purchased is useless until it is brought to the business. As machinery is a fixed asset and transportation paid is an additional cost to the machinery, so it is a capital expenditure and hence debited to machine account.

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