Match the following List I List II a. Capital is the difference between 1. Cost of goods sold from sales b. Gross profit is ascertained by deducting 2. To find out cost of production c. Wages paid for erecting machines are 3. Assets and liabilities d. The manufacturing account is prepared 4. Debited to machinery account

The correct answer is: A. a-4, b-3, c-2, d-1

• Capital is the difference between assets and liabilities. It is the amount of money that a business owner has invested in the business.
• Gross profit is ascertained by deducting the cost of goods sold from sales. It is the amount of money that a business makes from selling its products or services, after deducting the cost of the goods that were sold.
• Wages paid for erecting machines are debited to the machinery account. This is because the wages are an expense that is directly related to the purchase of the machinery.
• The manufacturing account is prepared to find out the cost of production. It is a financial statement that shows the costs that are incurred in the production of goods or services.

Here is a more detailed explanation of each option:

• Option A: a-4, b-3, c-2, d-1

a. Capital is the difference between assets and liabilities. It is the amount of money that a business owner has invested in the business. Capital is calculated by taking the total assets of a business and subtracting the total liabilities.

b. Gross profit is ascertained by deducting the cost of goods sold from sales. It is the amount of money that a business makes from selling its products or services, after deducting the cost of the goods that were sold. Gross profit is calculated by taking the total sales of a business and subtracting the cost of goods sold.

c. Wages paid for erecting machines are debited to the machinery account. This is because the wages are an expense that is directly related to the purchase of the machinery. The machinery account is a type of asset account that is used to track the cost of machinery. When wages are paid for erecting machines, they are recorded as an expense in the machinery account.

d. The manufacturing account is prepared to find out the cost of production. It is a financial statement that shows the costs that are incurred in the production of goods or services. The manufacturing account is prepared by taking the total costs of production and dividing them by the number of units produced.

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