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JAMB Principles of Accounts 1994 Question 38

Question 38

Company Accounts

When shares issued are paid for, the accounting entry required is

  1. A.debit bank or cash account and credit share capital and/or premium account
  2. B.credit bank or cash account and debit share capital and/or premium account
  3. C.debit shares account and credit capital account
  4. D.credit shares account and debit capital account.
Show the answer and explanation

Answer: A (debit bank or cash account and credit share capital and/or premium account)

Explanation

Money received is debited to bank (or cash) and the share capital (and share premium, if any) is credited.