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JAMB Principles of Accounts 2002 Question 11

Question 11

Cash Book

The normal accounting entry to record the dishonour of a cheque by a businessman is to

  1. A.debit cash book and credit suspense account
  2. B.debit cash book and credit drawer
  3. C.credit cash book and debit suspense account
  4. D.credit cash book and debit drawer.
Show the answer and explanation

Answer: D (credit cash book and debit drawer.)

Explanation

A dishonoured cheque reverses the receipt: credit the cash book (bank) and debit the drawer, who owes the money again.