Paper 1 · November 2020 · Accruals and prepayments
The following nominal account appeared in the ledger of a business.
Motor fuel account
Debit side: 2016 January 5 Cash $2 500; January 20 Bank $7 200; total $9 700
Credit side: 2016 January 31 Income statement $9 200; January 31 Balance c/d 9 700
The balance carried down on 31 January 2016 represents
Amotor fuel not paid for at end of the month.
Bmotor fuel paid for during the month.
Cmotor fuel used during the month.
Dmotor fuel not used at the end of the month.
Explanation
$9 700 was paid but only $9 200 was charged to the income statement; the balance c/d on the credit side brings down a $500 debit balance, an asset of fuel paid for but not yet used.
ZIMSEC Principles of Accounting 4051/1, November 2020, Q39