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JAMB Principles of Accounts 2012 Question 41

Question 41

Partnership Admission, Retirement and Dissolution

In converting a partnership into a limited liability company, the necessary accounts to be opened in the books of the company are

  1. A.business purchase account and ordinary share capital account
  2. B.business purchase account, vendor account and ordinary share capital account
  3. C.business purchase account and vendor account
  4. D.ordinary share capital account, vendor account and unpaid share capital account.
Show the answer and explanation

Answer: B (business purchase account, vendor account and ordinary share capital account)

Explanation

The company opens a business purchase account for the assets taken over, a vendor account for the amount owed, and share capital for the shares given in payment.