Installation Expense Account
Cash Account
Profit & Loss Account
Machinery Account
Answer is Right!
Answer is Wrong!
The correct answer is: A. Installation Expense Account.
The installation expenses for a new machinery are the costs incurred in installing the machinery in the business. These costs are usually non-recurring and are not directly related to the production of goods or services. Therefore, they are classified as expenses and are debited to the Installation Expense Account.
The Cash Account is used to record all cash receipts and payments. The Profit & Loss Account is used to record all revenues and expenses for a period of time. The Machinery Account is used to record the cost of machinery and any subsequent additions, disposals, and depreciation.
Here are some additional details about each option:
- Option A: Installation Expense Account. This is the correct answer. The installation expenses for a new machinery are the costs incurred in installing the machinery in the business. These costs are usually non-recurring and are not directly related to the production of goods or services. Therefore, they are classified as expenses and are debited to the Installation Expense Account.
- Option B: Cash Account. The Cash Account is used to record all cash receipts and payments. The installation expenses for a new machinery are not cash receipts or payments, so they would not be recorded in the Cash Account.
- Option C: Profit & Loss Account. The Profit & Loss Account is used to record all revenues and expenses for a period of time. The installation expenses for a new machinery are expenses, but they are not revenues. Therefore, they would not be recorded in the Profit & Loss Account.
- Option D: Machinery Account. The Machinery Account is used to record the cost of machinery and any subsequent additions, disposals, and depreciation. The installation expenses for a new machinery are not the cost of the machinery, so they would not be recorded in the Machinery Account.