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WAEC Financial Accounting 2014 Question 6

Question 6

Cash Book

The accounting treatment for a dishonoured cheque is; debit

  1. A.Customer's Account; credit Bank Account.
  2. B.Bank Account; credit Customer's Account.
  3. C.Customer's Account; credit Sales Account.
  4. D.Sales Account; credit Customer's Account.
Show the answer and explanation

Answer: A (Customer's Account; credit Bank Account.)

Explanation

When a customer's cheque bounces, the money leaves the bank (credit Bank) and the customer owes the amount again (debit Customer).