Double-entry recording of asset purchase on credit

Steps:

• Identify the transaction: Ted acquires a machine (asset) on credit from T Limited (supplier).
• Apply double-entry rule: Debit increases in assets; credit increases in liabilities.
• Debit machinery account to record asset increase.
• Credit T Limited account (accounts payable) to record liability increase.

Why C is correct:

• In accounting, fixed assets like machinery are debited to the asset account, while credit purchases create a liability to the supplier, per the double-entry system.

Why the others are wrong:

• A: Reverses debits and credits; debiting a liability decreases it incorrectly.
• B: Uses "purchases" account, meant for inventory, not fixed assets like machinery.
• D: Identical to B; misapplies "purchases" for a capital asset acquisition.

Final answer: C