Bola, UTC's regular customer, owed ₦1,00 on account of a radio bought. If he sent in a cheque for ₦1,500, UTC would send him a

Assessment: JAMB UTME - Principles of Accounts - 1995 Subject: Financial Accounting

Question 1 Report

Bola, UTC's regular customer, owed ₦1,00 on account of a radio bought. If he sent in a cheque for ₦1,500, UTC would send him a
Answer Details
If Bola owed ₦1,000 on account of a radio bought and sent in a cheque for ₦1,500, UTC would have an excess of ₦500. To refund this excess payment, UTC would issue a credit note to Bola, which represents a document or a slip given by the seller to the buyer, acknowledging that the buyer has returned goods or has been overcharged. In this case, the credit note would acknowledge that UTC has been overpaid and would serve as evidence to reduce the balance owed by Bola on account. Therefore, the correct answer is a credit note.
Read lesson note on Cashbook (JAMB)
Read lesson note on Principles Of Double Entry (JAMB)
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