You buy a Hotel and erect it on your Property, which accounts are debited and credited respectively

Question

BlackTom AI · Accepted Answer

The question asks which accounts are debited and credited when you buy a hotel and erect it on your property.
Option a: Cash and Hotels. This sequence would imply cash is debited and hotels credited, which is inconsistent with the usual entry for a purchase where an asset is gained (debit) and cash is paid (credit).
Option b: Houses and Cash. Here, ‘Houses’ is not the correct asset account for a hotel purchase, and the logic of debiting one asset while crediting cash is misapplied because the asset acquired is a hotel, not a house, and the correct paired accounts are hotel-related.
Option c: Hotels and Cash. This matches the standard double-entry: you debit the asset you acquire (Hotels) to increase it, and you credit Cash to reflect the outflow of cash used to purchase the hotel. The ordering here reflects the increases and decreases in the appropriate accounts for a capital asset purchase.
Option d: Hotels and Bank Loan. This would be appropriate if the purchase were financed by a loan (crediting Bank Loan), but the scenario states you buy it and erect it on your property, implying payment from cash rather than incurring a new loan, so this choice misrepresents the financing.
In summary, the only option that correctly applies the double-entry principle for an outright cash purchase of a hotel asset is the one where Hotels is debited (to show the addition to assets) and Cash is credited (to show the cash payment).

Dashboard Practice non assessable quiz Monopoly sample questions

You buy a Hotel and erect it on your Property, which accounts are debited and credited respectively

View Explanation

Log in for full answers

Similar Questions

Regardless of the business activity recorded, the left side of an account is the debit side and the right side is the credit side.

The double-entry system of debits and credits means that:

Expense accounts are increased with credit entries.

What happens if a credit amount is entered in the A/R Adjustment Entry form?

A debit may signify a(n)

True or false for the following statement : " Debit means an increase and Credit means a decrease ."

True or False? " In recording for the business transactions, debits mean an increase and credit means a decrease."

Credits are always on the __________ side of a T-account.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler