Neco Model Questions Vol1 2019 Financial Accounting Question 15

Practice objective / multiple choice question 15 from the 2019 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2019 Financial Accounting Objective / Multiple Choice Medium Difficulty
Question 15 NECO_MODEL_QUESTIONS_VOL1 • 2019 • FINANCIAL_ACCOUNTING • objective

The trial balance of DEF Ltd shows the following balances: Purchases - Debit (₦120{,}000); Cash - Credit (₦120{,}000); Accounts Payable - Credit (₦0). The purchase was intended to be on credit, but the credit was mistakenly posted to Cash instead of Accounts Payable. Identify the error and show the correcting entries using a suspense account.

Answer Options

A. Error: Cash was debited instead of Accounts Payable. Correcting entries: (i) Credit Cash ₦120,000; Debit Suspense ₦120,000. (ii) Credit Suspense ₦120,000; Debit Accounts Payable ₦120,000.
B. Error: Accounts Payable was credited instead of Cash. Correcting entries: (i) Debit Accounts Payable ₦120,000; Credit Suspense ₦120,000. (ii) Debit Suspense ₦120,000; Credit Cash ₦120,000.
C. Error: Purchases was credited instead of Accounts Payable. Correcting entries: (i) Debit Purchases ₦120,000; Credit Suspense ₦120,000. (ii) Debit Suspense ₦120,000; Credit Cash ₦120,000.
Correct Answer D. Error: Cash was credited instead of Accounts Payable. Correcting entries: (i) Debit Cash ₦120,000; Credit Suspense ₦120,000. (ii) Debit Suspense ₦120,000; Credit Accounts Payable ₦120,000.
Correct Answer
D
Correct Option:
Error: Cash was credited instead of Accounts Payable. Correcting entries: (i) Debit Cash ₦120,000; Credit Suspense ₦120,000. (ii) Debit Suspense ₦120,000; Credit Accounts Payable ₦120,000.

About This Question

This is Neco Model Questions Vol1 2019 Financial Accounting Question 15. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Medium .

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