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WAEC Financial Accounting 2011 Question 39

Question 39

Departmental Accounts

Rent owed by a department is treated in the Balance Sheet as

  1. A.asset of the business
  2. B.asset of the department
  3. C.liability of the business
  4. D.liability of the department
Show the answer and explanation

Answer: C (liability of the business)

Explanation

Departments are not separate entities; any rent owed is a liability of the business as a whole.