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JAMB Principles of Accounts 2007 Question 36

Question 36

Control Accounts

The purchases ledger control account showed a credit balance of ₦525 000 on April 30, 2006. This amount shows

  1. A.what the debtors of a business enterprise owed the business
  2. B.the total amount which each debtor owed the business
  3. C.what a business enterprise owed its creditors
  4. D.the total amount which a business enterprise owed each creditor.
Show the answer and explanation

Answer: C (what a business enterprise owed its creditors)

Explanation

The credit balance of the purchases ledger control account is the total owed to all creditors, not to each one.