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WAEC Financial Accounting 1994 Question 4

Question 4

Correction of Errors and Suspense Account

A debit cash balance of ₦26,900 was brought down as ₦24,300. The entries necessary to correct the error are

  1. A.debit Cash Account ₦5,200, credit Suspense Account ₦5,200
  2. B.credit Cash Account ₦5,200, debit Suspense Account ₦5,200
  3. C.debit Cash Account ₦2,600, credit Suspense Account ₦2,600
  4. D.credit Cash Account ₦2,600, debit Suspense Account ₦2,600
  5. E.credit Cash Account ₦2,600, debit Bank Account ₦2,600.
Show the answer and explanation

Answer: C (debit Cash Account ₦2,600, credit Suspense Account ₦2,600)

Explanation

The cash balance is ₦2,600 too low, so cash must be debited ₦2,600 and suspense credited.