A bank purchases a new server for its data centre. Evaluate the following statements related to the accounting entries: Statement 1: The initial purchase of the server is debited to the Fixed Asset Account at its cost, which is a Real Account. Statement 2: If the bank sells the server for a gain at the end of its useful life, the profit on sale is credited to the Profit and Loss Account. Statement 3: All installation and freight charges for the server should be debited to the Expense Account as they are revenue in nature. Which of the combinations is correct?

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Accounting · Fixed Assets and Capital Expenditure

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Statements 1 and 2 are correct.

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Answer 1

Only Statement 1 is correct.

Answer 2

Statements 2 and 3 are correct.

Answer 3

Statements 1 and 3 are correct.

Answer 4

Statements 1 and 2 are correct.

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