Rick bought a car for use in the company costing £5,000 on 31 December 2021. He took out a business loan for this on 31 December 2021.
The double entry for the purchase of van is:
Increase the expense a/c = DEBIT LOAN ACCOUNT A/C £5,000
Increase liability a/c = CREDIT MOTOR VEHICLES A/C £5,000

Question

Quizplus · Accepted Answer

The correct double entry should be: Debit Motor Vehicles Account £5,000 (to record the asset) and Credit Loan Account £5,000 (to record the liability).

Rick Bought a Car for Use in the Company Costing