WAEC Accounting 2020 Paper

Concept:A purchases ledger control account records all transactions with trade creditors, so a credit balance is normal.A debit balance on this account usually indicates that the business has paid more than the amount owed.Explanation:The purchases ledger control account is also called the trade creditors control account.When the business owes suppliers, the account shows a credit balance.When the business pays suppliers or returns goods, the account is debited.If these debits exceed the credit purchases, the account will show a debit balance.Therefore, a debit balance of $\mathrm{N}420$ means the business has paid the creditor $\mathrm{N}420$ more than the actual purchases.It does not mean that creditors are owed money; it means the trade creditors were overpaid by $\mathrm{N}420$.Answer:A. trade creditors were overpaid by $\mathrm{N}420$