JAMB Accounts Principles of Accounts 2012 Paper

Concept:A motor van bought for business use is an asset, not an item for resale.Explanation:When cash is paid for the van, the business gains a motor van.An increase in an asset is recorded as a debit.So debit the motor van account.Cash is being paid out, so the cash balance decreases.A decrease in an asset is recorded as a credit.So credit the cash account.This follows the double entry principle: debit the receiver, credit the giver.Answer:C. motor van and credit cash.