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JAMB Principles of Accounts 2013 Question 4

Question 4

Double Entry and the Ledger

July 1 – Started business with ₦10,500
July 31 – Paid Agromachinex ₦6,000 owing them
The double entry for July 1 would be

  1. A.debit capital and credit cash.
  2. B.credit cash and debit bank.
  3. C.debit cash and credit capital.
  4. D.debit purchases and credit cash.
Show the answer and explanation

Answer: C (debit cash and credit capital.)

Explanation

Cash comes into the business (debit cash) and the owner's capital rises (credit capital).