A credit purchase of machinery worth ₹50,000 will: MCQ with Answer and Explanation

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A credit purchase of machinery worth ₹50,000 will:

A. Increase assets and decrease liabilities

B. Increase assets and increase liabilities

C. Decrease assets and increase liabilities

D. Decrease assets and decrease capital

Answer: Option B

Solution (By JKSSB Mock Tests)

Machinery (asset) increases, and a creditor liability increases. So assets and liabilities both increase.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Which of the following documents serves as a source voucher for a credit purchase?

A. Cash memo

B. Pay-in slip

C. Invoice received from supplier

D. Debit note issued by us

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Correct Answer: Option C

Explanation:
The supplier's invoice is the evidence of a credit purchase, acting as a source voucher.

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Question #2

The 'Share Based Payments' (Ind AS 102) require equity-settled transactions to be measured at:

A. Market price on grant date only

B. Fair value of goods/services received, or if not reliably determinable, fair value of equity instruments granted

C. Intrinsic value

D. Nominal value

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Correct Answer: Option B

Explanation:
Equity-settled share-based payments are measured at fair value.

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Question #3

Expenditure incurred on overhauling a second-hand machinery purchased recently to put it in working condition is:

A. Loss

B. Deferred Revenue Expenditure

C. Revenue Expenditure

D. Capital Expenditure

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Correct Answer: Option D

Explanation:
All costs incurred before a fixed asset is ready for its intended use are capitalized.

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