Accounting Multiple Choice Question – 16 December 2023

A business buys, on credit, a new machine for their factory from Alex Trading Ltd.

The double entry to record this transaction is?

Select ONE answer:

1. account to be debited: MACHINERY and account to be credited: ALEX TRADING LTD
2. account to be debited: MACHINERY and account to be credited: BANK
3. account to be debited: PURCHASES and account to be credited: ALEX TRADING LTD
4. account to be debited: PURCHASES and account to be credited: BANK

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 1

1. Correct– The account that is debited is the NCA account, ‘machinery’. This ensures that the new machine is correctly shown in the SOFP. The ‘purchases’ account is only used for the purchase of goods for re-sale. The credit entry is to the relevant accounts payables account, which uses the name of the supplier, to show that money is owed to the supplier, as ALEX TRADING LTD account is a current liability account.
2. Not correct
3. Not correct
4. Not correct

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