Day: November 21, 2019

A loss incurred upon the disposal of plant and equipment should be . . .

Select ONE answer:

1. credited to the plant and equipment account.
2. debited to the profit and loss account.
3. debited to the provision for depreciation account.
4. credited to the provision for depreciation account.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not Correct
2. All profits and losses are recorded in the profit and loss account. Losses are recorded as debits and profits are recorded as credits. The profit earned or loss incurred on disposal is ‘calculated’ in the relevant disposal account. In the case of a loss, the balance on this account will be a credit. This is then transferred to the profit and loss account as a debit.
3. Not Correct
4. Not Correct

 

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