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WAEC Financial Accounting 2014 Question 16

Question 16

Capital and Revenue Expenditure

The purchase of ten ceiling fans by Akpan Electronic Enterprises will be recorded as

  1. A.an acquisition of fixed assets.
  2. B.an expense in its general office expense account.
  3. C.part of capital in the capital account.
  4. D.an acquisition of stock.
Show the answer and explanation

Answer: D (an acquisition of stock.)

Explanation

Akpan deals in electronics, so ceiling fans are goods bought for resale: they are stock (purchases), not fixed assets.