Once the construction of a new building is completed it is moved out of the ______ and into the ______ account.Multiple choice question.Construction in Progress; BuildingBuilding; expenseConstruction in Progress; expenseasset; expense
Question
Once the construction of a new building is completed it is moved out of the ______ and into the ______ account.Multiple choice question.Construction in Progress; BuildingBuilding; expenseConstruction in Progress; expenseasset; expense
Solution
The correct answer is "Construction in Progress; Building".
Here's why:
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When a new building is under construction, the costs associated with this process are recorded under the "Construction in Progress" account. This is an asset account that includes all direct costs related to the construction of the building.
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Once the construction is completed, the building is ready for use. At this point, the costs accumulated under the "Construction in Progress" account are transferred to the "Building" account. This is also an asset account, but it represents the completed building that is now a usable asset for the company.
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The options "Building; expense", "Construction in Progress; expense", and "asset; expense" are incorrect because the completed building is not an expense. It is an asset that the company will use for its operations.
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