Question

Andy, an inexperienced accountant, had to account for his company's purchase of a motorcar on credit. Unsure of the correct accounting entries, Andy debited the supplier's account and credited the motor expenses account. Was Andy correct?

Answer 1

Andy is correct

Answer 2

No he should have credited the motor car as either inventory ( depending on the type of company he worked for) or an asset and the he should have credited the Accounts Payable account because the machine was brought on credit therefore it is a liability to the company and must be repaid at sometime in the future.

Answer 3

es. Andy's recording of the transaction was correct.

Answer 4

Correct

Answer 5

Andy, an inexperienced accountant, had to account for his company's purchase of a motorcar on credit. Unsure of the correct accounting entries, Andy debited the supplier's account and credited the motor expenses account. Was Andy correct?