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JAMB Principles of Accounts 1997 Question 24

Question 24

Control Accounts

which of the following conditions best represents the net effect of discount allowed on credit sales on the accounts of a business?

  1. A.decrease in the closing balance of sales ledger control account
  2. B.increase in net profit
  3. C.increase in the value of sales
  4. D.decrease in the value of purchases in the trading account.
Show the answer and explanation

Answer: A (decrease in the closing balance of sales ledger control account)

Explanation

Discount allowed is credited to the sales ledger control account, reducing what debtors owe.