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GCE Financial Accounting 1989 Question 1

Question 1

Cash Book

The Bank Column in the Cash Book shows a credit balance of ₦180. This means

  1. A.a total payment of ₦180.
  2. B.a gross receipt of ₦180
  3. C.a left over of ₦180 in the bank.
  4. D.an overdraft of ₦180
  5. E.a left over of ₦180 cash.
Show the answer and explanation

Answer: D (an overdraft of ₦180)

Explanation

A credit balance on the bank column means the business has taken out more than it put in, i.e. it owes the bank (an overdraft).