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Accounts problem

Gaurav Mohnani (OWNER) (536 Points)

19 June 2012

A AC DEALER PURCHASED SOME AC'S AND FIXED THEM IN HIS SHOWROOM.

DRAWINGS OR PURChases ?

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40 Replies

chandu (student) (1051 Points)
Replied 19 June 2012

it would be in nature of capital expenditure so now u can easily decide either it was trasnfer to drawings r purchase....

Gaurav Mohnani (OWNER) (536 Points)
Replied 19 June 2012

i think drawings ?

Ali Raza (Student : CA - IPCC ) (163 Points)
Replied 19 June 2012

I think the question was something different in the exam..It was , An a.c. dealer purchases a.c's and used those a.c's in his house.

Gaurav Mohnani (OWNER) (536 Points)
Replied 19 June 2012

what is the answer dude ?????

DRAWINGS OR PURCHASE OR FIXED ACCOUNT

Tejaswi Kasturi (student-cpt) (427 Points)
Replied 19 June 2012

he is not using the air conditioners for himself, he is using them for his shop, so that everyone in the shop could benefit from it (including cutomers) it is like buying furniture for the shop like buying a chair. it doesn't matter whether you use the chair or your customer. the chair or in this case A/c is being used by the shop or business and it will be counted as an asset to the business and hence you have to debit fixed account

Gaurav Mohnani (OWNER) (536 Points)
Replied 19 June 2012

A purchase of Rs.500 was to to be debited but credited with 500. Trial Balance will vary by

500 or 1000 ?

Ali Raza (Student : CA - IPCC ) (163 Points)
Replied 19 June 2012

obviously 1000..

Tejaswi Kasturi (student-cpt) (427 Points)
Replied 19 June 2012

It will vary by 1000. first there is an decrease in the cash (if it is a cash purchase) but no corresponding increase in purchase but a decrease in purchase by 500 so purchases decreases by 500 where purchases should increase by 500 so the difference will be 500-(-500) = 1000