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A) Dr. Maintenance of vehicle expense Cr. Toy Automotive Company
(B) Dr. Purchases Cr. Toy Automotive Company
(C) Dr. Motor vehicle Cr. Toy Automotive Company
(D) Dr. Motor vehicle Cr. Cash
Option C is the right answer
this like buying any assets and should be has depreciation and the recording will be debit / car credit / company seller.
The Answer is C because Increase in Asset and liability.
Dr. Motor vehicle Cr. Accounts payable (when Purchased) Dr. Accounts Payable Cr. Toy Automotive Company (When Recording Invoice)
The answer is (C) Debt: Motor vehicle Cridet: Toy Automotive Company
(C) Dr. Motor vehicle Cr. Toy Automotive CompanyAsset is purchased on credit, hence a creditor (liability) should be created.
Answer A is ruled out because it is not a maintenance expense
The use of purchases as a ledger title is vague and rules answer B outAnswer D is ruled out because it is not a cash expense.
(C) Dr. Motor vehicle Cr. Toy Automotive Company
B) Dr. Purchases Cr. Toy Automotive Company
Whether purchase at credit or cash it will be a purchase and hence should appear in purchases
c..............................
It's specifically identified as Motor Car purchased on CREDIT Basis,
Therefore, following entry shall be passed;
Debit Asset (Motor Car)
Credit Toy Automotive Company
Later upon payment
Debit Toy Automotive Company
Credit Cash
