Multiple choice

To which of the following accounts is Rs. 5,000 spent on the repair of a newly purchased old motor car debited?

  1. Repairs account

  2. General expenses account

  3. Motor car account

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Repairs to bring a newly purchased second-hand asset to working condition are CAPITALIZED and added to the asset's cost, not treated as revenue expenditure. This is because they enhance the asset's value and make it functional, unlike routine repairs that maintain an existing asset. Repairs account and General expenses account are for revenue expenditure.

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