CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle
Under the traditional (British) rules of debit and credit, which of the following is correctly classified?
Furniture is a real account, and under the rule 'debit what comes in' it is debited when purchased. The other options misclassify accounts: rent outstanding is personal, drawings are debited, and debtors are personal accounts debited on credit sales.
- ARent outstanding is a real account and is debited when it increases
- BDrawings is a nominal account and is credited when the proprietor withdraws goods
- CFurniture is a real account and is debited when it is purchasedCorrect
- DDebtors is a nominal account and is credited when goods are sold on credit
Explanation
Furniture is a tangible asset, so it is a real account; the rule is to debit what comes in, so purchase of furniture is debited. Rent outstanding is a personal account (a liability to the landlord). Drawings reduces capital and is debited, and Debtors is a personal account that is debited when goods are sold on credit.
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