I came across 2 questions from the QBank with answers that used terminalogy of credit/debit with somewhat conflicting uses; if anyone can elaborate
A firm is purchasing equipment for its operations. The equipment has a useful life of 7 years. On the firm�s financial statements the equipment should be recorded as a:
A) credit to property, plant and equipment and a debit to cash.
B) debit to property, plant and equipment and a credit to cash.
C) debit to property, plant and equipment and a credit to depreciation expense.
D) debit to property, plant and equipment and a credit to stockholder�s equity.
Your answer: A was incorrect. The correct answer was B) debit to property, plant and equipment and a credit to cash.
The firm should record a debit to property, plant, and equipment, and a credit to cash for the purchase of the equipment. Depreciation is expensed after the asset is in use.
When a bond matures, the accounting entry is a debit to:
A) long-term liability and a credit to cash.
B) cash and a credit to long-term liability.
C) expense and a credit to long-term liability.
D) long-term liability and a credit to expense.
Your answer: A was correct!
At the time of maturity a bond will generate an entry to decrease (credit) cash and decrease (debit) long-term liability. This transaction makes the market value of the bond equal to its book value.
A firm is purchasing equipment for its operations. The equipment has a useful life of 7 years. On the firm�s financial statements the equipment should be recorded as a:
A) credit to property, plant and equipment and a debit to cash.
B) debit to property, plant and equipment and a credit to cash.
C) debit to property, plant and equipment and a credit to depreciation expense.
D) debit to property, plant and equipment and a credit to stockholder�s equity.
Your answer: A was incorrect. The correct answer was B) debit to property, plant and equipment and a credit to cash.
The firm should record a debit to property, plant, and equipment, and a credit to cash for the purchase of the equipment. Depreciation is expensed after the asset is in use.
When a bond matures, the accounting entry is a debit to:
A) long-term liability and a credit to cash.
B) cash and a credit to long-term liability.
C) expense and a credit to long-term liability.
D) long-term liability and a credit to expense.
Your answer: A was correct!
At the time of maturity a bond will generate an entry to decrease (credit) cash and decrease (debit) long-term liability. This transaction makes the market value of the bond equal to its book value.