[amp_mcq option1=”Closing stock account Dr – To Purchase account” option2=”Advertisement account Dr – To purchase account” option3=”Profit & loss account Dr – To advertisement account” option4=”Sales account Dr – To advertisement account E. Prepaid advertisement account Dr – To advertisement account” correct=”option2″]<\/p>\n
The correct answer is: B. Advertisement account Dr – To purchase account<\/strong><\/p>\n When goods are distributed as free samples or for charity purposes, the cost of the goods is considered an expense. This is because the company is not expecting to receive any revenue from the distribution of the goods. The expense is recorded in the advertisement account, which is a type of expense account that is used to track the costs of advertising and promotional activities. The purchase account is a type of asset account that is used to track the costs of goods that are purchased for resale. When goods are distributed as free samples or for charity purposes, the cost of the goods is transferred from the purchase account to the advertisement account.<\/p>\n Here is a more detailed explanation of each option:<\/p>\n This option is incorrect because the closing stock account is a type of asset account that is used to track the cost of goods that are held at the end of an accounting period. The cost of goods that are distributed as free samples or for charity purposes is not included in the closing stock.<\/p>\n This option is correct because the advertisement account is a type of expense account that is used to track the costs of advertising and promotional activities. The cost of goods that are distributed as free samples or for charity purposes is considered an expense.<\/p>\n This option is incorrect because the profit and loss account is a type of statement of financial performance that is used to report the revenues and expenses of a business for a specific period of time. The cost of goods that are distributed as free samples or for charity purposes is not included in the profit and loss account.<\/p>\n This option is incorrect because the sales account is a type of revenue account that is used to track the sales of goods or services. The cost of goods that are distributed as free samples or for charity purposes is not included in the sales account.<\/p>\n This option is incorrect because the prepaid advertisement account is a type of asset account that is used to track the costs of advertising and promotional activities that have been paid for in advance. The cost of goods that are distributed as free samples or for charity purposes is not considered an asset.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Closing stock account Dr – To Purchase account” option2=”Advertisement account Dr – To purchase account” option3=”Profit & loss account Dr – To advertisement account” option4=”Sales account Dr – To advertisement account E. Prepaid advertisement account Dr – To advertisement account” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-57513","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n\n
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