Question

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

A payment of Rs. 100 to Kokate Carriage Co. for bringing a machine to the business place should be debited to ______.
a) Machine A/c
b) Cash A/c
c) Kokate carnage Co. A/c
d) Carriage A/c

Answer 1

A payment of Rs. 100 to Kokate Carriage Co. for bringing a machine to the business place should be debited to the Machine A/c.

Explanation:
The expenses incurred to bring in assets in a workable condition before they are put to use are capitalised and added to the asset account. Therefore, the expenses incurred for bringing a machine to a business place should be debited to the machine account. This expenditure is non-recurring in nature and any expenses incurred before the asset is put to use are debited to the asset account.