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WAEC Financial Accounting 1993 Question 11

Question 11

Branch Accounts

Cash stolen from branch-takings is recorded in the Head Office books by debiting

  1. A.defalcations Account and crediting Branch Stock Account.
  2. B.Mark-up Account and crediting Branch Stock Account
  3. C.defalcations Account and crediting Profit and Loss 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 (defalcations Account and crediting Branch Stock Account.)

Explanation

Stolen takings never reach head office, so the loss is debited to defalcations and the branch stock account credited.