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WAEC Financial Accounting 2024 Question 10

Question 10

Accounting Equation

A sole trader received the sum of N 4,860 cash from a debtor. The effect of this transaction in the balance sheet is

  1. A.decrease in stock and increase in debtor.
  2. B.decrease in asset and increase in liability.
  3. C.increase in cash and decrease in debtor.
  4. D.increase in cash and decrease in capital.
Show the answer and explanation

Answer: C (increase in cash and decrease in debtor.)

Explanation

One asset (cash) goes up and another (debtors) goes down by the same amount.