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Rahul , the proprietor of M/s . R. K .& Co. purchased an air - conditioner and installed it at his residence. The payment was made by issuing a cheque from the accountof M/s R. K. & Co. The Accountant debited the Drawings Account with the amount whereas Rahul is of the view that should be debited to the FixedAssets . In your view , who is correct and why ? |
| Answer» Solution :The ACCOUNTANT is correct because ACCORDING to the Business ENTITY Concept business is separate and distinct from the owners . Since , the air - conditioner has been installed at the RESIDENCE of the proprietor , i.e., for his personal use , it is drawings by the owner. | |