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JAMB Principles of Accounts 2012 Question 5

Question 5

Double Entry and the Ledger

The capital of a sole trader can be increased by

  1. A.debiting the capital account
  2. B.crediting the capital account
  3. C.debiting the cash account
  4. D.crediting the cash account.
Show the answer and explanation

Answer: B (crediting the capital account)

Explanation

Capital is on the credit side, so any addition to it (more money brought in, or profit) is credited to the capital account.