Question

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

A purchase of horse in cash should be debited to ______
a) Livestock A/c
b) Goods A/c
c) Cash A/c
d) Bank A/c

Answer 1

A purchase of horse in cash should be debited to Livestock A/c.

Explanation:
Domestic animals used in a business to help in doing business more effectively are treated as assets of the business and included under the head of the Livestock A/c. Hence, the purchase of a horse will be debited to the Livestock A/c.
It is not the goods of the business, as it is not purchased for resale in business.