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JAMB Principles of Accounts 2005 Question 39

Question 39

Branch Accounts

The head office of Emeka Stores maintains the financial accounts of all its branches. The branch store account in the head office serves as the branch

  1. A.debtors' account
  2. B.trading account
  3. C.expenses account
  4. D.cash account
Show the answer and explanation

Answer: B (trading account)

Explanation

The branch stock account is debited with goods sent and credited with sales; its balancing figure is the gross profit, so it acts as the branch's trading account.