WAEC Accounting Past Questions & Answers - Page 105

To answer this question, note that whatever comes into the business is recorded on the debit side, and whatever goes out is recorded on the credit side. 

''Nwoye buys stock and pays by cheque''. The entries in the books of Nwoye is, debit Purchases and Credit bank. what this accounting entry means is that, money had gone out of the business by virtue of the cheque that was issued to a seller by nwoye for the purchase of stocks (goods) for resale and in return, goods were given to Nwoye (goods have come into the business after payment was made by cheque). Always remember the principle of double entry which states that, for every credit entry, they must be a corresponding debit entry vice versa. 

NOTE: in accounting, purchases are goods that are bought for the purpose of reselling.

Impersonal account; any account other than a personal account, being classified as either a real account, in which property is recorded, or a nominal account, in which income, expenses and capital are recorded.

Tangible assets are physical in nature that can be either long-term or short-term asset. Intangible assets are long-term assets that are not physical, but rather, intellectual property. Both tangible and intangible assets are recorded on the balance sheet.

External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.

No explanation has been provided for this answer.