Question

Jefferson County bought a new backhoe using General Fund cash. When the asset was acquired, what was the appropriate entry that was made in the General Fund, assuming that the entity maintains its books and records in a manner to facilitate the preparation of fund financial statements? a. Debit Equipment; Credit Cash. b. Debit Equipment; Credit Investment in fixed assets. c. Debit Expenditure; Credit Cash. Debit Expenditure; d. Credit Investment in fixed assets.

Answer 1

Answer:

a. Debit Equipment; Credit Cash.

Explanation:

Backhoe is a fixed asset therefore, cannot be categorized as an expenditure, further it is paid in cash therefore, cash account will be credited, and further

Equipment will be debited, as asset account is debited if created or any value added in it , also in categorization the equipment will be clubbed in fixed assets but directly the amount will not be debited to fixed assets.

Therefore correct entry will be:

Debit Equipment

Credit Cash