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JAMB Principles of Accounts 2005 Question 40

Question 40

Branch Accounts

In reconciling the branch and head office accounts, remittance in transit in the branch books is treated as a

  1. A.debit entry
  2. B.credit entry
  3. C.contra entry
  4. D.reversal entry
Show the answer and explanation

Answer: C (contra entry)

Explanation

The key treats cash in transit as a contra item: it is entered on both sides when the two current accounts are agreed.