Neco Model Questions Vol1 2018 Financial Accounting Question 31

Practice objective / multiple choice question 31 from the 2018 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2018 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 31 NECO_MODEL_QUESTIONS_VOL1 • 2018 • FINANCIAL_ACCOUNTING • objective

ABC Ltd purchased a new machine for \(\text{₦}500,000\) cash. The installation cost of \(\text{₦}30,000\) was incurred but will be paid later. According to accounting concepts, what total amount should be recorded as the cost of the machine, and what is the appropriate journal entry to record the transaction?

Answer Options

A. Total cost = ₦560,000; Journal entry: Debit Equipment ₦560,000; Credit Cash ₦500,000; Credit Accounts Payable ₦60,000
B. Total cost = ₦500,000; Journal entry: Debit Equipment ₦500,000; Credit Cash ₦500,000; Credit Accounts Payable ₦30,000
Correct Answer C. Total cost = ₦530,000; Journal entry: Debit Equipment ₦530,000; Credit Cash ₦500,000; Credit Accounts Payable ₦30,000
D. Total cost = ₦530,000; Journal entry: Debit Equipment ₦530,000; Credit Cash ₦530,000; Credit Accounts Payable ₦0
Correct Answer
C
Correct Option:
Total cost = ₦530,000; Journal entry: Debit Equipment ₦530,000; Credit Cash ₦500,000; Credit Accounts Payable ₦30,000

About This Question

This is Neco Model Questions Vol1 2018 Financial Accounting Question 31. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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