Question

Which of the following is a capital transaction?
Options
1 Purchase of goods
2 Payment of wages
3 Sale of goods
4 Purchase of machinery​

Answer 1

Answer:

Purchase of Machinery is capital transaction

Answer 2

4) Purchase of machinery is a capital transaction.

Explanation:

• The Capital transaction is the transaction that involves the acquisition of a fixed asset in exchange for huge money.
• Generally, these transaction involves the involvement of huge money and it usually does not take place on regular basis.
• These transactions are aiding the business and help in generating the future cash inflows.
• Examples of capital transactions are: the purchase of furniture, building, land, machinery, goodwill, etc.
• Here, the only transaction that has all these features is the purchase of machinery.
• Purchase of goods, wages, and sales, is the operational and revenue transactions that are performed on the daily basis.