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JAMB Principles of Accounts 1999 Question 5

Question 5

Double Entry and the Ledger

When a proprietor withdraws cash from the business for private use, he

  1. A.debits cash account and credits drawings account
  2. B.credits cash account and debits bank account
  3. C.debits bank account and credits drawings account
  4. D.credits cash account and debits drawings account.
Show the answer and explanation

Answer: D (credits cash account and debits drawings account.)

Explanation

Cash goes out (credit cash) and the owner's drawings increase (debit drawings).