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JAMB Principles of Accounts 1994 Question 12

Question 12

Cash Book

The discount column of a three column cashbook is not balanced off but periodically transferred to the discount accounts because discounts

  1. A.are not important in cash book
  2. B.are cash items only
  3. C.do not form part of double entry
  4. D.are used for bank reconciliation.
Show the answer and explanation

Answer: C (do not form part of double entry)

Explanation

The discount columns in the cash book are memorandum columns, not part of the double entry, so their totals are posted to the discount accounts.