Question

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

Wages paid for installation of machinery should be debited to ______.
a) Wages A/c
b) Machinery A/c
c) Cash A/c
d) Installation A/c

Answer 1

Wages paid for installation of machinery should be debited to Machinery A/c.

Explanation:
Any expenditure incurred on the carriage and installation of machinery such as freight, transit expenses, installation expenses, wages etc should be treated as capital expenditure and should be debited to the Machinery A/c. This expenditure is non-recurring in nature and, thus, added to the value of the machinery. Thus, it should be debited to the Machinery A/c and not to the Wages A/c.