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WAEC Financial Accounting 2018 Question 15

Question 15

Control Accounts

A debit balance of GH¢420 on the Purchases Ledger Control Account means that as at that date

  1. A.trade creditors have been overpaid by GH¢420.
  2. B.trade creditors are owed GH¢420.
  3. C.goods returned to trade creditors amounted to GH¢420.
  4. D.total supplies from trade creditors amounted to GH¢420.
Show the answer and explanation

Answer: A (trade creditors have been overpaid by GH¢420.)

Explanation

A debit balance on a creditors' account means suppliers were overpaid.