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WAEC Financial Accounting 1998 Question 26

Question 26

Double Entry and the Ledger

Goods worth N800 were stolen. The double entries are, debit

  1. A.Purchases Account, credit Trading Account
  2. B.Trading Account, credit Purchases Account
  3. C.Profit and Loss Account, credit Purchases Account
  4. D.Profit and Loss Account, credit Capital Account
  5. E.Capital Account, credit Purchases Account.
Show the answer and explanation

Answer: C (Profit and Loss Account, credit Purchases Account)

Explanation

The loss is an expense (debit profit and loss) and the goods are removed from purchases (credit purchases).