Question

payment of reconstruction expenses is debited to​

Answer 1

Answer:

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Explanation:

An appreciation in the value of an asset or reduction in the amount of a liability should be debited to the account concerned and credited to Capital Reduction Account (or Reconstruction Account.

Answer 2

The payment of reconstruction expenses is debited to the Capital Reduction account.

• During the reconstruction of a firm, the assets are revalued and the liabilities are reassessed before transferring the business.
• It involves settling debt-s and other expenses which causes a reduction in the capital of partners, shareholders, owners of the business.
• A capital reduction account is created to record these transactions and the expenses are debited to this account.