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WAEC Financial Accounting 1996 Question 14

Question 14

Double Entry and the Ledger

Which of the following entries would be made for goods bought and paid for immediately?

  1. A.Debit Cash Account; credit Sales Account
  2. B.Debit Purchases Account; credit Cash Account
  3. C.Debit Cash Account; credit Purchases Account
  4. D.Debit Purchases Account; credit Sales Account
  5. E.Debit Purchases Account; credit Goods Account.
Show the answer and explanation

Answer: B (Debit Purchases Account; credit Cash Account)

Explanation

Goods bought increase purchases (debit) and paying cash reduces cash (credit).