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WAEC Financial Accounting 1993 Question 10

Question 10

Branch Accounts

Mark-up on goods sent to branch offices are recorded in the books by crediting

  1. A.Stock Adjustment Account debiting Branch Stock Account.
  2. B.Goods sent to Branch Account and debiting Branch Stock Account
  3. C.Branch Stock Account and debiting Stock Adjustment Account
  4. D.Cash Account and crediting Branch Stock Account
  5. E.Branch Stock Account and crediting defalcations Account.
Show the answer and explanation

Answer: A (Stock Adjustment Account debiting Branch Stock Account.)

Explanation

The branch stock account is kept at selling price; the mark-up part is credited to the branch stock adjustment account.