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WAEC Financial Accounting 1997 Question 18

Question 18

Purchase of Business

Where a business is purchased, the full amount of the purchase consideration is credited to

  1. A.Purchase of Business Account
  2. B.Creditor's Account
  3. C.Vender's Account
  4. D.Purchaser's Account
  5. E.Debtor's Account.
Show the answer and explanation

Answer: C (Vender's Account)

Explanation

The buyer debits the business purchase account and credits the vendor (seller) with the purchase consideration owed to him.