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WAEC Financial Accounting 2012 Question 15

Question 15

Double Entry and the Ledger

Osa started business with Le40,000 cash. The accounting entry is debit

  1. A.Cash Account; credit Capital Account.
  2. B.Capital Account; credit Cash Account.
  3. C.Purchases Account; credit Cash Account.
  4. D.Expenses Account; credit Capital Account.
Show the answer and explanation

Answer: A (Cash Account; credit Capital Account.)

Explanation

The business receives cash, so Cash is debited; the owner has given it, so Capital is credited.