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Question

Mr Ram purchased an asset for his business in cash. He is of the view that cash account shall be recorded on the left side, as cash is an asset while asset account should be recorded on the right side as there is an increase in the asset. Which of the following is incorrect in this transaction?


A

Asset shall be recorded on the right side of the asset account.

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B

Cash shall be recorded on left side of cash account

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C

Asset account shall be debited

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D

Both a and b

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Solution

The correct option is D

Both a and b


Cash is always credited when cash is paid and asset is always debited when it is purchased.


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