Nwoye buys stock and pays by cheque. The entries in the books of Nwoye is Debit
Answer Details
When Nwoye buys stock and pays by cheque, the entry in his books will be "Purchases; Credit bank".
Here's why:
- Purchases: This is the account that records the cost of the stock that Nwoye has purchased.
- Credit bank: This account is credited because Nwoye paid for the stock using a cheque. When a payment is made by cheque, it is first recorded in the bank account and then transferred to the relevant account. In this case, the payment will be transferred from the bank account to the purchases account.
To summarize, when Nwoye buys stock and pays by cheque, the purchases account is debited to reflect the cost of the stock purchased, while the bank account is credited to reflect the payment made by Nwoye. Therefore, the entry in Nwoye's books is "Purchases; Credit bank".