Question

What type of accounts are involved in following transaction:

When a building is purchased for cash:

• A. Both the accounts involved belong to current items.
• B. Both the accounts involved belong to non- current items.
• C. One is current item and another is non-current item
• D. None of these

Answer 1

The correct option is C One is current item and another is non-current item

When a building is purchased for cash it involves two accounts .i.e. cash account which is current in nature and building which is non-current item. The basic difference is that a current asset expects to use with in the accounting period and on the other hand non-current is expects to use for more than one accounting period.