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Hi John!
In June 2012, for the question Biscuits and Cakes, could you explain how this buying of a new machinery increases the net assets?
– If we invest, then we Dr Fixed asset Cr cash and therefore nothing changes
Please clarify this! ( I know it’s irrelevant for this paper, but could you briefly explain the relation between the Dr and Cr of this transaction and the increase in net assets)
Thanks.
Strictly you are correct – non-current assets will increase and cash will decrease, so the net assets would not change. The examiner has been inconsistent on this.
If you did this you would still get the marks (provided as always that your workings were clear for the marker).You have written the correct double entry yourself in your post!
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