A. Liquidator of selling company's account
B. Business purchase account
C. Assets account
D. None of the above
Answer: Option A
This Question Belongs to Commerce >> Accounting
Accounting provides information on
A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above
The long term assets that have no physical existence but are rights that have value is known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Patents, Copyrights and Trademarks are
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
When a company purchases another business, the purchase consideration payable is first recorded through the Business Purchase Account.
Entry when business is purchased
Business Purchase A/c Dr.
To Liquidator of Selling Company A/c
This means the purchasing company debits the Business Purchase Account to record the cost of acquiring the business.
Option Analysis
A. Liquidator of selling company's account → Credited, not debited ❌
B. Business purchase account → Debited by purchasing company ✅
C. Assets account → Debited later when assets are taken over ❌
D. None of the above → ❌
✅ Correct Answer: B. Business Purchase Account.