Wages paid for installation of machinery is debited to which one of the following accounts ........

General Accounting Principles Accounting cycles

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Wages paid for installation of machinery is debited to which one of the following accounts ?

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EPFO AO EO 2021

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Wages Account

Machinery Account

Installation Account

Profit and Loss Account

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Explanation:

- Wages paid for the installation of machinery are considered a capital expenditure because they are directly related to getting the machinery ready for use. Such costs enhance the value of the asset.

- Option 1: Wages Account - This is typically for regular wage expenses unrelated to capital assets.

- Option 2: Machinery Account - As installation costs improve the machinery's utility and are necessary for its setup, these costs are debited to the Machinery Account. Correct Answer

- Option 3: Installation Account - Generally, no separate account is maintained for installation unless specified otherwise in specific accounting practices.

- Option 4: Profit and Loss Account - Only regular revenue expenses are charged here, not capital expenditures.