Question

Wages paid on the erection of a new machinery should be debited to___________.

• A. wages A/c
• B. machinery A/c
• C. cash A/c
• D. either (a) or (b)

Answer 1

The correct option is B machinery A/c

It is a Capital expenditure.

Machinery is a permanent asset of the business and can be used for many years but it will not benefit to the business until it is installed and erected at a proper place. So amount spent on purchase of machinery, on its installation and erection is a capital expenditure.