Ignoring GST, the correct entry to record the purchase of a motor vehicle for $45 000 cash is:

Question

Quizplus · Accepted Answer

The correct entry to record the purchase of a motor vehicle for $45,000 cash is to debit the Motor Vehicles account and credit the Bank account. This is because the entity has acquired an asset (motor vehicle) and paid for it in cash, which means there is a decrease in the bank balance and an increase in the value of the motor vehicle. Option A records the transaction in reverse order, which is incorrect. Option C records the transaction as an equity transaction, which is also incorrect. Option D suggests an Accounts Receivable account, which means there is no indication of a credit sale or a credit transaction, hence it is also incorrect.

Ignoring GST, the Correct Entry to Record the Purchase of a Motor