When a Second-Hand Building Is Purchased Which of These Should

question 19

Multiple Choice

When a second-hand building is purchased which of these should not be debited to the building account but charged to a separate asset account?

• A) Expenditure on initial repairs to the building floor
• B) Stamp duty paid on the property purchase
• C) The cost of installing an air conditioning system
• D) Legal fees for the purchase of the property

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Definitions:

Cost of Goods Sold

The total cost directly associated with producing the goods that have been sold during a specific period.

Period End

The conclusion of an accounting period, at which time financial statements are prepared and financial activities are summarized.

Transfer

The movement of resources, products, or services from one part of an organization to another.

Manufacturing Firm

A business involved in the industrial production or manufacturing of goods, typically using machinery and labor.