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JAMB Principles of Accounts 2013 Question 5

Question 5

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 31 would be

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

Answer: A (debit Agromachinex and credit cash.)

Explanation

Paying a creditor reduces what is owed to him (debit Agromachinex) and reduces cash (credit cash).