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    Question

    On purchase of old furniture, the amount of ₹1,000

    spent on its repair should be debited to:
    A Repair account Correct Answer Incorrect Answer
    B Furniture account Correct Answer Incorrect Answer
    C Cash account Correct Answer Incorrect Answer
    D Capital expenditure account Correct Answer Incorrect Answer
    E Revenue expenditure account Correct Answer Incorrect Answer

    Solution

    When an asset (like old furniture) is purchased and immediately repaired to bring it to usable condition, the repair cost becomes part of the capital cost of the asset. Hence, it should be added to the Furniture account, not expensed as a revenue expenditure.

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