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CS Executive · Corporate Accounting and Financial Management · Introduction to Accounting

In the ledger of Nair Enterprises, the Cash Book shows a payment of rent of ₹12,000 made by cheque. Which statement about posting this to the ledger is correct?

Rent A/c is debited and Bank A/c is credited with ₹12,000. Rent is an expense, which is debited, and a cheque payment reduces the bank balance, which is a credit. Cash is not involved because the payment was made through the bank.

  1. ADebit Rent A/c and credit Bank A/c with ₹12,000Correct
  2. BDebit Bank A/c and credit Rent A/c with ₹12,000
  3. CDebit Rent A/c and credit Cash A/c with ₹12,000
  4. DCredit both Rent A/c and Bank A/c with ₹12,000

Explanation

Rent is an expense, so it is debited. Payment by cheque reduces the bank balance, so the Bank account is credited. Crediting Cash is wrong because no cash changed hands.

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