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JAMB Principles of Accounts 2006 Question 17

Question 17

Accounting Concepts and Conventions

Accrual accounting differs from cash accounting because it recognizes

  1. A.cash and creditors
  2. B.debtors and creditors
  3. C.cash and debtors
  4. D.prepayment and cash.
Show the answer and explanation

Answer: B (debtors and creditors)

Explanation

Accrual accounting records income when earned and expenses when incurred, so it shows amounts owed to and by the business (debtors and creditors).