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    Question

    Some of the goods purchased for trading are used for the

    construction of business premises. The account to be credited is: 
    A Business premises A/c Correct Answer Incorrect Answer
    B Purchases A/c Correct Answer Incorrect Answer
    C Sales A/c Correct Answer Incorrect Answer
    D None of the above Correct Answer Incorrect Answer

    Solution

    When goods purchased for trading are used for constructing business premises, they must be removed from Purchases and treated as a capital expenditure. Correct Accounting Entry: • Debit: Business Premises A/c (asset increases) • Credit: Purchases A/c (goods no longer part of trading stock)

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