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JAMB Principles of Accounts 1995 Question 6

Question 6

Books of Original Entry

Which of the following transactions is BEST recorded in the general journal?

  1. A.Payment of rent with a cheque
  2. B.Purchase of stock with cash
  3. C.Purchase of an asset on credit terms
  4. D.Transfer of cash from head office to branch.
Show the answer and explanation

Answer: C (Purchase of an asset on credit terms)

Explanation

Rent paid by cheque, cash purchases and cash transfers are entered in the cash book. A fixed asset bought on credit is not a cash item and not stock, so it is recorded in the journal proper.