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WAEC Financial Accounting 1997 Question 7

Question 7

Control Accounts

Creditors Control Account
Dr: Bank "X"; Discount N30; Balance c/d N450
Cr: Balance b/d N1,200; "Y" N1,800
"Y" represents

  1. A.sales
  2. B.purchases
  3. C.returns outwards
  4. D.returns inwards
  5. E.disccount allowed.
Show the answer and explanation

Answer: B (purchases)

Explanation

Credit purchases increase the amount owed to suppliers, so they appear on the credit side of the creditors control account.