Multiple choice

Material costing Rs. 700 in the erection of a machinery and the wages paid for it amounting to Rs. 400 should be debited to

  1. material account

  2. wages account

  3. purchase account

  4. machinery account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Both material cost (Rs. 700) and erection wages (Rs. 400) are CAPITAL EXPENDITURE because they're necessary to install and make the machinery operational. These costs become part of the machinery's total cost and are debited to Machinery account, not treated as separate revenue expenses.

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