Question

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

Wages paid for installation of machinery should be debited to _________________ account.
a) machinery
b) wages
c) trading
d) profit and loss

Answer 1

Wages paid for installation of machinery should be debited to Machinery account.

Explanation: Wages paid for the installation of Machinery should be debited to the Machinery Account. Such wages should not be debited to the Trading Account because these wages represent capital expenditure. So, it must be added to the cost of machine.