Question

Purchase of cow in cash should be debited to ?

Answer 1

Answer:

Explanation:

Live stocks account-. Dr.

     To cash account

(Being cow purchased )

Answer 2

In this case, the livestock account will be debited and the cash account will be credited.

Explanation:

• In Accounting, any bookkeeping entry is debited if it signifies any inflow of asset or capital and credit if there is any outflow or deduction of asset or capital for any business organization.
• In this particular instance,purchase of cow means that the particular company has bought or purchased which now becomes an asset of the company to be used in its business or commercial operation.On the other hand, the company has to pay the price of the cow in cash which signifies outflow of money or capital.
• Therefore, the addition of the cow to the company as a productive asset is documented by a debit in the livestock account by the amount equal to the price of the cow and credit in the cash account implying money or capital outflow equivalent to the price for which the cow has been bought.