WAEC Accounting 2021 Objective — Question 20

Question 20 of 50 from the West African Examinations Council (WAEC) Accounting 2021 Objective paper, with the correct answer and a full explanation.

Lima paid off a debt of D2,500 owed to Dongo by cash. The entries in Lima's books are

A. debit Cash D2,500; credit Dongo D2,500
B. debit Dongo D2,500; credit Cash D2,500Correct
C. debit Bad Debt D2,500; credit Dongo D2,500
D. debit Dongo D2,500; credit Bad Debt D2,500

Explanation

Since Lima is a debtor to Dongo and is paying cash, cash goes out (credit) and the creditor (Dongo) balance reduces (debit): Dr Dongo (Creditor) Account, Cr Cash Account.

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