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WAEC Financial Accounting 2016 Question 4

Question 4

Double Entry and the Ledger

Nwoye buys stock and pays by cheque. The entries in the books of Nwoye is Debit

  1. A.Purchases; Credit cheque
  2. B.Purchases; Credit bank.
  3. C.Bank; Credit Purchases.
  4. D.Cheque; Credit Purchases.
Show the answer and explanation

Answer: B (Purchases; Credit bank.)

Explanation

Stock bought for resale is debited to purchases and the payment by cheque is credited to the bank account.