Payment of Rs. 6,000 as wages to workmen for installation of a machine should be debited to _________.

Wages A/c

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Repairs A/c

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Machinery A/c

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Cash A/c

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Solution

The correct option is C Machinery A/c
Machinery is a permanent asset of the business and can be used for many years but it will benefit to the business until it is installed at a proper place. Also any expense made in connection to fixed asset before commencement of business is regarded as capital expenditure, which means the respective expenses would be debited to fixed asset A/c. Therefore, payment of Rs. 6,000 as wages to workmen for installation of a machine should be debited to machinery A/c.

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