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JAMB Principles of Accounts 1998 Question 5

Question 5

Accounting Concepts and Conventions

A business transaction is recorded in the books of accounts when the

  1. A.owner of the business invests his ₦10,000 in another company
  2. B.business retains part of its profits for future expansion purposes
  3. C.business applies for overdraft facilities from its bankers
  4. D.owner of the business collects ₦5,000 from the accountant.
Show the answer and explanation

Answer: D (owner of the business collects ₦5,000 from the accountant.)

Explanation

Money the owner takes from the business is drawings, a business transaction. His private investments are not, and applying for an overdraft is not yet a transaction.