Neco 2020 Financial Accounting Question 18

Practice objective / multiple choice question 18 from the 2020 Neco Financial Accounting examination.

Neco 2020 Financial Accounting Objective / Multiple Choice Easy Difficulty

Question 18 NECO • 2020 • FINANCIAL_ACCOUNTING • objective

During the first week of the month the owner of a sole‑proprietorship injects \(\text{₦}120,000\) of cash into the business. Prepare the journal entry for this transaction and state the effect on the accounting equation.

Answer Options

A. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦100,000. Assets increase by ₦120,000 and equity increases by ₦100,000; liabilities unchanged.

B. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦120,000. Assets increase by ₦120,000 and equity unchanged; liabilities unchanged.

Correct Answer C. Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦120,000. Assets increase by ₦120,000 and equity increases by ₦120,000; liabilities unchanged.

D. Journal entry - Debit Owner's Capital ₦120,000; Credit Cash ₦120,000. Assets decrease by ₦120,000 and equity decreases by ₦120,000; liabilities unchanged.

Correct Answer

Correct Option:

Journal entry - Debit Cash ₦120,000; Credit Owner's Capital ₦120,000. Assets increase by ₦120,000 and equity increases by ₦120,000; liabilities unchanged.

About This Question

This is Neco 2020 Financial Accounting Question 18. It is one of the objective questions from the 2020 Neco Financial Accounting examination.

Difficulty level: Easy .

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