CA Foundation · Accounting · Accounting Process
Under the traditional approach, which one of the following is a correct classification with the rule for increasing it?
Machinery is a real account, and under the traditional rule, debit what comes in and credit what goes out. The other options misclassify accounts: discount received is nominal, drawings is debited when increased, and outstanding salary is credited as a liability.
- AOutstanding salary is a personal account; debit the receiver
- BDrawings is a nominal account; credit it when it increases
- CMachinery is a real account; debit what comes inCorrect
- DDiscount received is a real account; credit what goes out
Explanation
Machinery is a real account, and the rule is to debit what comes in and credit what goes out. Drawings is treated as a personal account of the proprietor and is debited when it increases. Discount received is a nominal income, and outstanding salary is a liability, not a receiver.
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